(Corrects paragraphs 11-12 to clarify remarks of Mortgage
Bankers Association President David Stevens)
* Banks that settled continue filing questionable paperwork:
* Reuters identifies 6 robo-signers still pumping out
By Scot J. Paltrow
NEW YORK/IMMOKALEE, Florida, July 18 America's
leading mortgage lenders vowed in March to end the dubious
foreclosure practices that caused a bruising scandal last year.
But a Reuters investigation finds that many are still taking
the same shortcuts they promised to shun, from sketchy paperwork
to the use of "robo-signers."
In its effort to seize the two-bedroom ranch house of
87-year-old Margery Gunter in this down-on-its-luck Florida
town, OneWest Bank recently filed a court document that appears
riddled with discrepancies. Mrs. Gunter, who has lived in the
house for 40 years and gets around with the aid of a walker,
stopped paying her loan back in 2009, her lawyer concedes. To
foreclose, the bank submitted to the Collier County clerk's
office on March 3 a "mortgage assignment," a document essential
to proving who owns a mortgage once the original lender sells it
But OneWest's paperwork is problematic. Among the snags:
state law permits lenders to file to foreclose only if they
already legally own a mortgage. Yet the key document
establishing ownership wasn't signed and officially recorded
until months after OneWest filed to foreclose on Mrs. Gunter.
OneWest declined to comment on the case.
Reuters has found that some of the biggest U.S. banks and
other "loan servicers" continue to file questionable foreclosure
documents with courts and county clerks. They are using tactics
that late last year triggered an outcry, multiple investigations
and temporary moratoriums on foreclosures.
In recent months, servicers have filed thousands of
documents that appear to have been fabricated or improperly
altered, or have sworn to false facts.
Reuters also identified at least six "robo-signers,"
individuals who in recent months have each signed thousands of
mortgage assignments -- legal documents which pinpoint ownership
of a property. These same individuals have been identified -- in
depositions, court testimony or court rulings -- as previously
having signed vast numbers of foreclosure documents that they
never read or checked.
Among them: Christina Carter, an employee of Ocwen Loan
Servicing of West Palm Beach, Florida, a "sub-servicer" which
handles routine mortgage tasks for banks. Her signature -- just
two "C"s -- has appeared on thousands of mortgage assignments
and other documents this year.
In a case involving a foreclosure by HSBC Bank USA, a New
York state court judge this month called Carter a "known
robo-signer" and said he'd found multiple variations of her
two-letter signature on documents, raising questions about
whether others were using her name. That and other red flags
prompted the judge to take the extraordinary step of threatening
to sanction HSBC's chief executive officer.
In a phone interview, Carter acknowledged signing large
numbers of mortgage assignments this year, but said they all
were legally done. To her knowledge, she added, no one else used
One of the industry 's top representatives says it is
possible that the federal settlements haven't put a stop to
questionable practices. "My judgment is that robo-signing had
essentially gone away," said David Stevens, president of the
Mortgage Bankers Association. "It doesn't mean that there aren't
other ways to continue to cut corners, or mistakes occurring
with select servicers."
Nearly all borrowers facing foreclosure are delinquent,
Stevens added, but "the real question is whether the servicer
complied with all legal requirements." The loss of a home is
"the most critical time in a family's life," and if foreclosure
paperwork is faulty homeowners should contest it. "Families
should be using every opportunity they can to protect their
Federal bank regulators signed settlements in March with 14
loan servicers -- banks and other companies that perform tasks
for mortgage investors such as collecting payments from
homeowners and when necessary, filing to foreclose. The 14 firms
promised further internal investigations, remediation for some
who were harmed and a halt to the filing of false documents. All
such behavior had stopped by the end of 2010, they said.
Of these companies, Reuters has found at least five that in
recent months have filed foreclosure documents of questionable
validity: OneWest, Bank of America , HSBC Bank USA, Wells
Fargo and GMAC Mortgage.
So have half a dozen large servicers that weren't party to
the agreements, including Ocwen Financial Corp and units
of Credit Suisse Group AG .
Spokesmen for the banks and servicers named in this article
said that they halted any wrongdoing after disclosures last
autumn of robo-signing led them to revise their practices, and
they denied filing false documents since then.
In general, they said their foreclosure cases were
legitimate, but for a small number of exceptions, and that
criticism by defense lawyers and judges of some types of
documentation is based on misinterpretation of the law.
The persistence of the paperwork mess poses a dilemma for
American policymakers and society at large.
The vast majority of homeowners in foreclosure are in fact
delinquent on their mortgage payments. Many bankers and judges
view the issue as a technicality. Regardless of legal niceties,
they say, people should pay up or lose the collateral on the
loans -- their houses and condos.
Increasingly, though, courts are holding that the trusts
suing to foreclose don't actually own the mortgages. Judges have
ruled that foreclosing based on flawed or missing evidence
violates longstanding laws meant to protect all Americans'
In a landmark decision in January, the Massachusetts Supreme
Judicial Court overturned a foreclosure because of a lack of
"The holder of an assigned mortgage needs to take care to
ensure that his legal paperwork is in order," wrote Justice
Robert Cordry in a concurring opinion. "Although there was no
apparent actual unfairness here to the (homeowners), that is not
the point. Foreclosure is a powerful act with significant
consequences, and Massachusetts law has always required that it
proceed strictly in accord with the statutes that govern it."
(U.S. Bank National Association, trustee, vs. Antonio Ibanez,
458 Mass. 637.)
A THOUSAND QUESTIONS
Reuters reviewed records of individual county clerk offices
in five states -- Florida, Massachusetts, New York, and North
and South Carolina -- with searchable online databases. Reuters
also examined hundreds of documents from court case files, some
obtained online and others provided by attorneys.
The searches found more than 1,000 mortgage assignments that
for multiple reasons appear questionable: promissory notes
missing required endorsements or bearing faulty ones; and
"complaints" (the legal documents that launch foreclosure suits)
that appear to contain multiple incorrect facts.
These are practices that the 14 banks and other loan
servicers said had occurred only on a small scale and were
halted more than six months ago.
The settlements included the four largest banks in the
United States -- Bank of America Corp, Wells Fargo, JP Morgan
Chase & Co , and Citigroup Inc . The other parties
were lending units of Ally Financial Inc , HSBC Holdings
PLC , MetLife Inc , PNC Financial Services Group
Inc , SunTrust Banks Inc , U.S. Bancorp, Aurora
Bank, EverBank Ever.N, OneWest Bank and Sovereign Bank.
The pacts were struck with the Office of the Comptroller of
the Currency, the main regulator of national banks, as well as
with the Federal Reserve, the Federal Deposit Insurance Corp.
and the Office of Thrift Supervision.