Robo-Signed Documents Halt BOA and Chase Foreclosures

The New York Times and the Huffington Post have reported problems with Chase and Bank of America using "robo-signers" to sign stacks of court foreclosure documents.  It is reported that Chase and BOA have stopped foreclosures in 23 states.  Since these reports, attorney generals in California, Illinois, Ohio and Florida have stepped up their scrutiny of the foreclosure procedures used by the country's biggest lenders.  The Office of the Comptroller of Currency has also requested 6 of the biggest lenders to review their foreclosure procedures.

Based on reported stories and my review of one deposition transcript, it appears as though Chase and BOA assigned certain employees to sign foreclosure documents.  In judicial foreclosure states, foreclosure documents are filed in court to initiate and prosecute a foreclosure.  Many times the foreclosing banks are required to file affidavits with their foreclosure fiilings.  Affidavits are typically signed "under the pains and penalties of perjury" by a person with "personal knowledge" of the facts in the affidavit.  Filing false or inaccuarate documents with a court is usually a big problem that can lead to a tongue lashing from a judge or sanctions against the filing party.

The problem as reported is that Chase and BOA had employees sign thousands of foreclosure documents a month with little, if any, review of the documents themselves or of the borrower's loan file.  These robo-signed documents were then filed in various state courts as part of foreclosure cases.  The accuracy of the information in these affidavits is immediately suspect because the person signing the affidavits did not qualify as company employees or representatives who had knowledge of the loan, the amount due or the satisfaction of any pre-filing state law notice requirements.   In short, there is no guaranty that the information attested to in the affidavits is accurate because the rob-signers took only a few seconds to sign each set of foreclosure documents. 

Many foreclosures are not challenged because borrowers cannot afford to hire an attorney.  The potential tragedy is that borrowers who could not afford to defend themselves may have lost their homes based on inaccurate or false information provided to the court by lenders who used robo-signers.