Robo-Signing Foreclosure Scandal Could Threaten Financial Stability, Government Watchdog Warns
By Shahien Nasiripour
The ongoing "turmoil" roiling megabanks and their faulty home foreclosure practices may represent deeper, more systemic problems regarding the origination, transfer and ownership of millions of mortgages, potentially putting Wall Street on the hook for billions of dollars in unexpected losses and threatening to undermine "the very financial stability that the Troubled Asset Relief Program was designed to protect," a government watchdog warns in a new report.
Recent revelations regarding mortgage companies' use of "robo-signers" when processing foreclosure documents "may have concealed much deeper problems in the mortgage market," according to the Tuesday report by the Congressional Oversight Panel, an office formed to keep tabs on the bailout.
Disclosures by big banks that they employed people whose sole job was to essentially rubber-stamp foreclosure documents without reading them or verifying basic facts led firms like JPMorgan Chase, Wells Fargo and Bank of America to halt home repossessions beginning in late summer and early fall.
In turn, all 50 state attorneys general, federal prosecutors and a host of federal agencies began probing exactly what went wrong, and whether the use of robo-signers represented a one-time mistake or if they're emblematic of broader legal shortcuts taken to cut costs and disguise other shortcomings. The industry is fighting to calm regulators, investors, and members of Congress by arguing the revelations represent isolated cases that are being quickly resolved.
But the oversight panel, led by former Senator Ted Kaufman, a Delaware Democrat who replaced noted consumer advocate Elizabeth Warren when she left to form a new federal consumer protection agency, has misgivings.
In the best-case scenario, "embraced by the financial industry," the panel's concerns "may prove overblown," it notes. In the worst-case scenario, the "robo-signing of affidavits served to cover up the fact that loan servicers cannot demonstrate the facts required to conduct a lawful foreclosure," the panel said in its report. "In essence, banks may be unable to prove that they own the mortgage loans they claim to own."
Continue reading - there's much more...
Nov 16, 2010 at 5:28 PM
Reader Comments (7)
'Robo-Signer' Foreclosure Scandal May Threaten Fundamental Financial Stability, Government Watchdog Warns
http://news.yahoo.com/s/yblog_newsroom/20101114/tr_yblog_newsroom/san-diego-man-balks-at-scan
http://freedominourtime.blogspot.com/2010/11/daedalus-shrugged-mounting-resistance.html
http://4closurefraud.org/2010/11/11/honoring-veterans-in-foreclosure/
http://4closurefraud.org/2010/11/16/cop-report-congressional-oversight-panel-report-on-foreclosure-fraud/
kaufman's report...
http://www.reuters.com/article/2011/07/18/us-foreclosure-banks-idUSTRE76H5XX20110718
[snip]
America's leading mortgage lenders vowed in March to end the dubious foreclosure practices that caused a bruising scandal last year.
But a Reuters investigation finds that many are still taking the same shortcuts they promised to shun, from sketchy paperwork to the use of "robo-signers."