Robo Signing- Whats going on?

Documents submitted to a court are sworn to and therefore presumed to be true and accurate on its face.  If the information contained therein is not verified as so stated, that is very troubling should a court find out- in fact it may be fraud upon the court.

Over the last several months we have heard nationally that banks and/or their service providers have engaged in
robo-signings- which has caused significant concern to the courts and goverment authorities. 

So what is Robo-Signing?
Essentially a robo-signer is a person who in a short period of time signs hundreds or even thousands of documents (in a foreclosure case) and swearing in those documents that they have personally reviewed the mortgage documents, when in fact, they have not. 

In a recent Palm Beach County Florida foreclosure case, Indymac Federal Bank, FSB v. Machado, (Fifteenth Circuit Court in and for Palm Beach County, Florida), an admitted robo-signer, Erica A. Johnson-Seck, employed by OneWest Bank, swore at her deposition that she signed about 750 mortgage documents a week, without a notary public present, does not spend more than 30 seconds signing each document and doesn not read the documents before signing them.

So why are banks doing this?
One of the reasons is that when a lender wants to foreclose on a property, they must prove that they have standing to sue, meaning that they in fact own the note and accompanying mortgage.  The problem arises in that the securitization of mortgages and changes in ownership of the the debt can make it cumbersome for lenders to establish the chain of title in ownership of the note and the production of original documents.  Its especially difficult when lenders are initiating large number of foreclosures and are crunched for time.  One major foreclosure company Lending Processing Services, Inc. rates attorneys on how fast they complete the process, giving lawyers green, yellow and red labels to reflect the Attorney Performance Rate.  If an attorneys office is in the red for too long, they will not receive any more business from the banks that LPS works for.  This creates an environment where time becomes money, so rather than take the time to produce the correct documents, they employ robo-signers to cut corners, and we are all seeing the results of this.  LPS, in its 2009 Form 10-K, filed with the U.S. SEC, states that it is "a provider of integrated technology and services to the mortgage lending industry, with market leading positions in mortgage processing and default management services in the U.S.; we offer lenders, servicers, and attorneys certain administrative and support services in connection with managing foreclosures, our two largest customers, Wells Fargo Bank, NA and JP Morgan Chase Bank, NA each accounted for more than 10% of our aggregate revenue."  LPS is the subject of a federal criminal investigation related to its foreclosure document preperation.  ON October 13, 2010 the Florida Attorney General issued to LPS an "Economic Crimes Investigative Subpoena Duces Tecum" seeking various foreclosure documents prepared by LPS and employment records for various robo-signers.

Warning: If you or anyone you know is facing a potential foreclosure, make sure you have an attorney scrutinize the loan documents.  You may be able to save your home or work out a meaningful modification to remain in your home.

Eran D. Grossman, Esq.