Mortgage servicers still lying in court

By Felix Salmon
September 1, 2011
Kate Berry has a fantastic piece of reporting today, under the headline "Robo-Signing Redux: Servicers Still Fabricating Foreclosure Documents".

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American Banker’s Kate Berry has a fantastic piece of reporting today, under the headline “Robo-Signing Redux: Servicers Still Fabricating Foreclosure Documents”. Among her discoveries is this document, dated August 3, 2011, wherein Tonya Hopkins signed over a mortgage in her capacity as Assistant Secretary of Sand Canyon Corporation. The problem with this? Sand Canyon hasn’t been in the mortgage business since 2009, and Tonya Hopkins doesn’t work for Sand Canyon: she works for American Home Mortgage Servicing Inc.

This, naturally, causes problems.

North Carolina consumer bankruptcy lawyer O. Max Gardner III says servicers and trustees often submit promissory notes in court without proper endorsements, which show the chain of title from one lender to another. Then, after the fact, there will be “a magically appearing note with a stamped endorsement,” Gardner said.

When plaintiff’s lawyers then try to depose the person whose name is stamped on the endorsement, “we’re being told the person is no longer employed by the servicer or by the party for whom they signed,” Gardner says.

There’s a case to be made that banks need to be able to reconstruct chains of title long after the events took place, because paperwork just wasn’t done properly during the subprime bubble. But even if you buy that argument, they should do so honestly and transparently. Their gut instinct, all too often, even today, is to simply fudge or forge the paperwork they need. And the fact that they’re still doing this, even as they’re supposedly in good-faith negotiations with state attorneys general on a big mortgage settlement, is a very good reason to believe that no such settlement will actually be effective. What we need isn’t a settlement; it’s enforcement. And there’s no sign we’re going to get it.

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