Over the weekend, Bank of America announced that it is suspending foreclosures in 23 states after a BofA official admitted he signed 7,000 to 8,000 foreclosure filings a month, but did not read them “because of the volume.” BofA joined JP Morgan Chase and GMAC Mortgage in halting foreclosures amidst revelations that foreclosure documents have been processed by so-called “robo-signers,” without any sort of due process or verification.
Last week, Wells Fargo, the second largest mortgage servicer in the country, offered assurances that its foreclosure process is sound, telling HousingWire, “Wells Fargo policies, procedures and practices satisfy us that the affidavits we sign are accurate. We audit, monitor and review our affidavits under controlled standards on a daily basis.” But, if a deposition obtained by the Associated Press is any example, that rosy assessment may not be based in reality:
An executive with Wells Fargo said he checked only the dates on up to 150 foreclosure documents he signed daily. The admission was made during a deposition in May when the executive said he relied on co-workers to make sure the information was correct on paperwork, according to news reports Sunday. The deposition of the Fort-Mill, S.C.-based Wells Fargo vice president, Herman John Kennerty, was reported over the weekend by AOL Daily Finance and obtained by The Associated Press.
In Florida, “a recent sample of foreclosure cases in the 12th Judicial Circuit of Florida showed that 20 percent of those set for summary judgment involved deficient documents.” That means one in five foreclosures in a state devastated by the housing crisis may be improper.
At least six states are investigating potentially improper foreclosure practices, and legal experts told the New York Times that courts “may impose sanctions on lenders or their representatives or may force banks to pay borrowers’ legal costs in these cases.” “[The banks' actions] reflects the hubris that as long as the money was going through the pipeline, these companies didn’t really have to make sure the documents were in order,” said Kathleen C. Engel, dean for intellectual life at Suffolk University Law School and an expert in mortgage law.
At the same time, a new study from Professor Douglas Massey of the Woodrow Wilson School of Public and International Affairs at Princeton University shows that “predatory lending aimed at racially segregated minority neighborhoods led to mass foreclosures that fueled the U.S. housing crisis.” Massey found that “living in a predominantly African-American area, and to a lesser extent Hispanic area, were ‘powerful predictors of foreclosures‘ in the nation,” as subprime lending in those areas skyrocketed.
So will Wells, like BofA and JP Morgan, suspend foreclosures until this mess is sorted out? Or will it continue to throw people out of their homes, when its own officials admit to not having done due diligence on foreclosure documents?
(HT: David Dayen)