October 14, 2010 11:47 AM
Fifty State AGs Take On 'Robo-Signers' in Foreclosure Probe
Posted by David Bario
Last Friday, we wrote about the burgeoning scandal involving so-called foreclosure mills--tiny law firms where "robo-signers" improperly signed massive numbers of foreclosure affidavits. We called it the biggest, and possibly murkiest, legal story to cross our desks in two weeks.
Now the story's getting even bigger--and it's looking more and more like an avalanche of litigation is inevitable. On Wednesday the attorneys general of all 50 U.S. states announced that they had joined together to investigate home foreclosure practices. And as Reuters reported Tuesday, the class action plaintiffs bar is already licking its chops.
In their announcement of the probe, the AGs cite evidence that "a number of mortgage loan servicers have submitted affidavits or signed other documents in support of either a judicial or nonjudicial foreclosure that appear to have procedural defects." Specifically, the AGs assert, "it appears affidavits and other documents have been signed by persons who did not have personal knowledge of the facts asserted in the documents."
The AGs allege that the loan servicers not only couldn't vouch for the authenticity of the documents they signed, but also signed many of the affidavits without a notary public present. "This process of signing documents without confirming their accuracy has come to be known as 'robo-signing,' the AGs say. "We believe such a process may constitute a deceptive act and/or an unfair practice or otherwise violate state laws."
The 50-state foreclosure mill investigation will be led by an executive committee comprised of AGs from 11 states: Arizona, California, Colorado, Connecticut, Florida, Illinois, Iowa, New York, North Carolina, Ohio, Texas, and Washington.
As we reported previously, at least four major lenders--including Bank of America, JPMorgan Chase, Ally Financial Inc., and PNC Financial Services-- have halted foreclosures in the wake of robo-signing revelations. And the private lawsuits have already begun to fly: In Florida, where foreclosures have been especially thick, firms like Greenberg Traurig and Morgan, Lewis & Bockius are lining up to defend clients from individual homeowner suits.
Our colleague Alison Frankel of the Litigation Daily reports that even before the state probe was announced, the allegations were generating plenty of work for lawyers advising lenders and other financial institutions. Andrew Sandler of the financial services boutique BuckleySandler told Frankel that half of the 100 lawyers at his firm are engaged in work related to mortgage industry investigations.
"This is a very serious enforcement, litigation, and public policy set of issues," Sandler told the Lit Daily. "It's going to keep lawyers throughout the [financial services] industry busy for a significant amount of time."Make a comment