Since the foreclosure epidemic began, banks have been foreclosing on homes at record rates. However, some of these foreclosures may not have been legal. Homeowners have alleged claims of “robo-signing” against banks and mortgage firms, but according to a recent article in the Chicago Tribune, robo-signing prosecutions may not lead to especially harsh penalties. In fact, while “five giant mortgage firms” are paying nearly $25 billion to settle claims of “robo-signing and other foreclosure abuses,” only one robo-signing case has actually gone before a jury. As of March 1st, only two robo-signing prosecutions were pending, and a judge recently decided to throw out one of those cases.
What does this mean in Illinois? Although mortgage companies are paying money to settle these claims, they may not be held accountable for robo-signing abuses and other fraudulent foreclosure mechanisms. If you’ve been a victim of robo-signing or another foreclosure abuse, you may be able to challenge your foreclosure in court with help from an experienced attorney.
What is Robo-Signing?
The term was coined in 2010, as consumers realized that the mortgage lending industry was using false affidavits to support thousands of foreclosure cases. This sparked a “robo-signing scandal,” in which several large banks and mortgage lenders put a temporary freeze on pending foreclosures until the mess could be sorted out.
So what does this term mean for homeowners? In nearly half of U.S. states, foreclosing on a home requires the lender (i.e., the bank) to go to court in order to finalize that foreclosure. In court, the lender also must show two things: 1) that the borrower defaulted on the mortgage, and 2) that the lender is the owner of the mortgage.
The lender proves that the borrower defaulted and that it owns the mortgage by submitting documents to the court, as well as an affidavit. What is an affidavit? According to Nolo.com, it’s a written statement, signed under oath, by a person who has looked at all of the mortgage documents and has found them to be true. The affidavit is typically signed by an employee of the bank, and it’s supposed to prevent any foreclosures in situations where the borrower either hasn’t defaulted, or in situations where the bank can’t prove that it owns the mortgage. In other words, it’s intended to prevent a fraudulent foreclosure.
Because large American banks were foreclosing on thousands of properties, some of their employees began signing these affidavits without playing by the rules—the bank employees either hadn’t reviewed the documents properly, or they had “no basis for believing that the homeowner was in default or that the bank owned the loan.” Since the affidavits were signed so quickly and without proper knowledge, this fraudulent act became known as “robo-signing.”
The Tampa Bay Times summed up “robo-signing” as a “back-office system of quickly signing off on foreclosure documents like affidavits without actually doing what the affidavits say was done. Also known as cheating and lying.”
Where are Robo-Signing Cases Now?
Huge banks such as JPMorgan Chase, Wells Fargo, GMAC, and Bank of America were implicated in the robo-signing scandal.
The Chicago Tribune noted that, of only two prosecutions in the country, the first involved 100+ felony counts against title officers from a Jacksonville, Florida mortgage servicer. A Nevada District Court Judge who heard this case ruled that the “prosecutors committed misconduct” in the case, leading the judge to dismiss the indictments. The second robo-signing prosecution led to guilty pleas of conspiracy, forgery, and falsifying documents. The defendant in that case now faces up to five years in federal prison and at least two in state prison.
Are you facing a foreclosure? Do you think you may have been a victim of robo-signing? Contact us today to discuss your case.
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