Faulty mortgage papers a widespread problem

‘Robo-signing’ dates to ’90s

“Because of these bad titles, property owners can’t prove they own the properties they think they bought,’’ said Jeff Thigpen, Guilford County, N.C., register of deeds. “Because of these bad titles, property owners can’t prove they own the properties they think they bought,’’ said Jeff Thigpen, Guilford County, N.C., register of deeds.
(Chuck Burton/Associated Press)
By Pallavi Gogoi
Associated Press / September 2, 2011

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NEW YORK - Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than first thought, tainting the deeds of tens of thousands of homes dating to the late 1990s.

The suspect documents could create legal trouble for homeowners for years.

Already, mortgage papers are being invalidated by courts, insurers are hesitant to write policies, and judges are blocking banks from foreclosing on homes. The findings by various county registers of deeds have also hindered a settlement between the 50 state's attorneys general who are investigating big banks and other mortgage lenders over controversial mortgage practices.

The problem of shoddy mortgage paperwork, which comprises several shortcuts known collectively as ''robo-signing,'' led the nation's largest banks, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., and other lenders to temporarily halt foreclosures nationwide in the fall of 2010.

At the time, ''robo-signing'' was thought to be contained to the affidavits that banks file and use to prove they have the right to seize a home for foreclosure. 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 back as far back as 1998.

''Because of these bad titles, property owners can't prove they own the properties they think they bought, and banks can't prove they had the right to sell them,'' says Jeff Thigpen, the register of deeds in Guilford County, N.C.

Even yesterday's action against Goldman Sachs Group by the nation's chief banking regulator, the Federal Reserve, does not address potential paperwork problems before 2009. The Fed said it planned a monetary penalty and ordered Goldman to retain an independent consultant to review foreclosure proceedings initiated by its mortgage loan unit, Litton Loan Servicing, that were pending in 2009 and 2010.

Also yesterday, Litton agreed to stop the practice of robo-signing and halt foreclosures of homes if mortgage paperwork was robo-signed as part of a settlement with New York's Department of Financial Services and Banking Department.

Meanwhile, federal bank regulators have focused on getting banks to clean up their act in the future, not on fixing the potentially millions of tainted documents that have been filed in land record offices in counties across the country.