Outrage: Big Banks Still Use "Robo-Signing" To Fake Documents And Foreclose on Borrowers
About a year ago, several of the nation’s biggest banks were caught in scandal over “robo-signing” — approving foreclosures without verifying basic information about the loan and fabricating documents to present to courts. For several months, a group of state attorneys general has been attempting to negotiate a settlement with the banks for their mortgage misdeeds.
However, those talks have broken down (as CAP warned they would), with the AG’s fracturing between those who want to craft a settlement quickly and those, like New York Attorney General Schneiderman, who want a deeper investigation into the banks’ activities. Meanwhile, as American Banker reported today, the banks have not stopped fabricating documentation in order to foreclose on borrowers:
Some of the largest mortgage servicers are still fabricating documents that should have been signed years ago and submitting them as evidence to foreclose on homeowners.
The practice continues nearly a year after the companies were caught cutting corners in the robo-signing scandal and about six months after the industry began negotiating a settlement with state attorneys general investigating loan-servicing abuses.
Several dozen documents reviewed by American Banker show that as recently as August some of the largest U.S. banks, including Bank of America Corp., Wells Fargo & Co., Ally Financial Inc., and OneWest Financial Inc., were essentially backdating paperwork necessary to support their right to foreclose.
In several instances, banks were signing over documents from lenders that no longer exist. For example, one Bank of America executive “signed a mortgage assignment on July 29 of this year that purported to transfer ownership of a mortgage from New Century Mortgage Corp. to a trustee, Deutsche Bank.” However, “New Century, a subprime lender, went bankrupt in 2007; and the Deutsche Bank trust that purported to hold the loan was created for a securitization completed in 2006 — about five years before Juarez signed it over to the trust.”
Goldman Sachs has reportedly agreed to “compensate some home loan borrowers for wrongful foreclosures,” as well as put an end to robo-signing. Given the way that the banks have handled the fallout from this scandal thus far, that is a promise that should definitely be taken with a grain of salt.