Frank A. Rubino, ESQ.

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Mortgage industry continues robo-signing documents

Over eight months ago mortgage companies and giant banks across the nation promised to clean up their acts when it came to mortgage documents. As the housing bubble burst, and the mortgage industry collapsed, many large lenders and banks came under scrutiny for their foreclosure practices.

One of those suspicious practices included "robo-signing," or fraudulently signing documents that transferred ownership. In some cases, mortgage industry executives signed the papers without verifying the information. In other cases, lower-level employees forged executives' signatures.

So many foreclosures were filed in 2009 and 2010 that banks were overwhelmed with paperwork, which often resulted in outsourcing to mortgage paperwork processing companies, like DocX, who would essentially churn and burn mortgage documents.

As part of the foreclosure crises, mortgage fraud investigators uncovered thousands of documents with suspicious signatures. While no numbers have been finalized, it is projected that over 3 percent of all mortgage documents have fraudulent signatures.

In April, 14 of the largest lenders, including JP Morgan Chase, Wells Fargo, Bank of America, Goldman Sachs, reached a settlement with federal regulators -- promising to stop the illegal signing practices and pay restitution to any homeowners who were wrongly foreclosed upon. One Florida homeowner said the settlement was a farce because the lenders were not really punished for their actions -- and thus do not have much incentive for ending their signing practices.

It should be no surprise, then, that suspicious signing practices have continued. Officials in at least three states say they continue to receive mortgage documents with suspicious signatures. Lenders claim they are trying to end the practice, but cannot explain why the widespread document fraud has not been halted.

Source: Associated Press, "AP Exclusive: Mortgage 'robo-signing' goes on," Michelle Conlin, 18 July, 2011.

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