Last week, mega-bank Wells Fargo refused to implement a foreclosure moratorium like those put in place by Bank of America, JP Morgan Chase, and GMAC Mortgage, stating that no such step was necessary because its foreclosure process was sound and not plagued by some of the “robo-signer” issues that other banks have found. This, as it turned out, wasn’t true; a desposition uncovered by the Financial Times showed that Wells had, in fact, relied on a robo-signer to process foreclosures.
Mortgage giant Citigroup has also, thus far, been adamantly opposed to putting a foreclosure moratorium in place. This morning, on a conference call, the bank reiterated its opposition to a foreclosure freeze, saying that it’s “fairly confident” that it didn’t engage in fraudulent foreclosure practices:
Citigroup sought to allay investors’ fears over the US mortgage crisis, saying it had not uncovered any irregularities in its foreclosure process and downplaying the potential cost of buying back home loans from government entities…“We have not found evidence of robo-signing as we have gone through our review,” John Gerspach, Citi’s finance chief, said. “We are fairly confident we have not relied on robo-signers.”
“Fairly confident” doesn’t sound all that confident to me. And it’s even less convincing considering that last week, the Palm Beach Post reported that Citigroup was using a law firm — run by “foreclosure king” David Stern — that processed foreclosures using robo-signers:
Attorney Tom Ice of Royal Palm Beach-based Ice Legal said the problem is that law firm employees were doing the work, not Citi employees. “In truth, CitiMortgage not only engaged in the same practice of using a robo-signer for its cases, they used a robo-signer who is actually an employee of the foreclosure mill attorneys representing them,” said Ice, who deposed Stern operations manager Cheryl Samons last year. Samons signed as “attorney-in-fact” for CitiMortgage in some foreclosure documents.
As the Associated Press reported, a former paralegal in Stern’s office told the Florida attorney general about “a boiler-room atmosphere in which employees were pressured to forge signatures, backdate documents, swap Social Security numbers, inflate billings and pass around notary stamps as if they were salt.” Citi was so spooked by the allegations that, as of last week, it is no longer sending business to Stern’s office.
At this point, it’s really hard to tell how widespread fradulent foreclosures are (though there definitely are some), which is why it makes sense for the banks to freeze actions until the extent of the problem is known. In addition to the issues facing people who were improperly foreclosed upon, as David Dayen put it, “you just feed homebuyers into a wood chipper if you let them buy a foreclosed home in a market with such confusion.” Emptywheel has more on Stern’s antics here.