Foreclosure Fraud Report: Banks Have Been Robo-Signing Documents Since 1998

Yesterday, American Banker reported that, even a year after they were busted in the “robo-signing” scandal, the nation’s biggest banks are still fabricating foreclosure documents. (As a reminder, the robo-signing mess involved banks approving thousands of foreclosures without verifying basic information and using fraudulent documents during court cases.) In several instances, banks were attempting to transfer mortgages between financial firms that went out of business years ago.

And as the Associated Press noted today, robo-signing is far from a new practice. In fact, county officials have found robo-signed documents dating back to 1998:

At the time, “robo-signing” was thought to be contained to the affidavits that banks file when a mortgage is issued and somebody buys a house. The documents are used to prove they have the right foreclosure if the homeowner isn’t making mortgage payments. Companies that process mortgages said they were so overwhelmed with paperwork that they cut corners.

But now, as county officials review years’ worth of mortgage paperwork, in some cases combing through one page at a time, they are finding suspect signatures — either signed with the same name by dozens of different people, improperly notarized or signed without a review of the facts in the paperwork — on all sorts of mortgage documents, dating as far back as 1998, The Associated Press has found.

In just one North Carolina county, “a sample of 6,100 mortgage documents filed since 2006 turned up 74 percent with questionable signatures.” We’ve noted previously that 75 percent of mortgage transfers in one Massachusetts county were found to be invalid. Judges in several states have begun throwing out foreclosure cases when banks present robo-signed or otherwise fraudulent documents.

As columnist Daniel Pereira wrote, “these reports paint a picture of a banking industry gone completely off the rails (as if that wasn’t common knowledge), cutting corners and flat-out lying about who owns which mortgages, what they’re worth and where they are stored.” Yesterday, the Federal Reserve sanctioned mega-bank Goldman Sachs for its role in the robo-signing mess.