Major Mortgage Lenders are Still

Reuters has reported that many big mortgage lenders are still robo-signing foreclosure documents, after agreeing to clean up their mortgage loan processing earlier this year. In March federal bank regulators and 14 major U.S. mortgage lenders executed a settlement agreeing to pay borrowers who were harmed and to stop filing false documents used to speed up the foreclosure process. The settlement included the four biggest banks in the United States, Bank of America, Wells Fargo, JP Morgan Chase & Company and Citigroup Incorporated. Other parties to the agreement included Ally Financial, HSBC Holdings PLC, MetLife, PNC Financial Sevices Group, SunTrust Banks, US Bancorp, Aurora Bank, EverBank, OneWest Bank and Sovereign Bank. The Reuters investigation reveals that at least five of the firms have in recent months filed questionable foreclosure documents, including OneWest, Bank of America, HSBC Bank USA, Wells Fargo and GMAC Mortgage. In addition to those, several other servicers that weren’t a party to the settlement have filed questionable documents, including Ocwen Financial Corporation and Credit Suisse Group AG.

OneWest Bank recently filed court documents that appeared to be loaded with discrepancies, according to the Reuters report. The borrower was an 87 year old lady named Margery Gunter who has lived in her house for 40 years and gets around with the aid of a walker. She was forced to stop paying her mortgage in 2009. OneWest filed a mortgage assignment which is essential to prove who owns a mortgage once the original lender sells it off. The problem with OneWest’s paperwork was that this key document establishing ownership was not filed until after Ms. Gunter was foreclosed upon. Florida law provides that lenders can only foreclose if they legally own a mortgage.

In another case, Reuters found six robo-signers, people who have signed thousands of documents that they never read or checked to speed up the foreclosure process. One such person was Christina Carter, an employee of Ocwen Loan Servicing of West Palm Beach, Florida. Her signature which consists of two “C”s appeared on thousands of documents. In a related matter involving an HSBC Bank foreclosure, a New York judge called Carter a “known robo-signer” and that he had found numerous variations of her two letter signature on paperwork suggesting that others had used her name. Because of these red flags, the judge threatened sanctions against HSBC’s chief executive officer.

Another robo-signer is Bryan Bly, an employee of Nationwide Title Clearing of Palm harbor, Florida. In deposition testimony, Bly revealed that he had signed as many as 5,000 mortgage assignments a day, signing the documents as a “vice president” and not knowing if the information was correct or understanding the words and expressions contained in them. He also testified that Nationwide increased his production by electronically stamping his signature on other mortgage assignments that he never saw. Moreover, he said that Nationwide’s notaries were given stacks of already signed papers to notarize falsely attesting to the fact that Bly had signed the document in front of them.

Documents reviewed by Reuters covered a five state area, including New York, Florida, Massachusetts and North and South Carolina. The searches revealed thousands of botched mortgage assignments, over 2,000 in Florida alone that were deficient for one reason or the other. In New York, Mary Arthur who is 63 years old, blind and works part time in a doctor’s office had her loan servicer attempt to foreclose on her home after she became delinquent due to debts related to the death of her parents and sister. The Credit Suisse unit DLJ Mortgage Capital filed two different cases showing what was supposed to be authentic copies of Mary Arthur’s promissory note. Examination of the documents revealed that the version filed in state court and the one filed in bankruptcy court completely different endorsements on them naming different owner banks and signed by different people, when they should have been identical.

Needless to say, the settlement agreement seems to be weak and the promises made continue to be broken by some, as the major lenders appear to be heading for another record breaking year of foreclosures in 2011.

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