Robo-Signing History Reaches Out To Haunt Ocwen

Robo-Signing History Reaches Out To Haunt Ocwen

The recent agreement by mortgage services giant Ocwen to stop robo-signing was identical to the agreement reached in 2012 by the five major lending institutions.

While the major banks – Bank of America, JP Morgan, Citi, Wells Fargo, and Ally/GMAC -agreed to stop the illegal practice of robo-signing as part of the 2012 National Mortgage Settlement, Ocwen was not bound to comply because it is not a bank. Ocwen is a leader of the mortgage servicing industry, but is not defined by regulators as a bank.

Robo-signing played a huge role in the foreclosure crisis that peaked in 2010 when allegations of robo-signing caused the banks to put a temporary halt to many foreclosures. Every bank agreed to stop the practice in the 2012 settlement, while at the same time admitting no wrong-doing. Owen followed suit in December 2013.

Robo-signing is not exactly what the name implies. It isn’t that a robot signed these foreclosure related legal documents. Real human beings signed them – perhaps with the mindless efficiency of a robot.

The problem with robo-signing was that in many cases, these signatures were on legal affidavits that were part of a foreclosure lawsuit. The person who signed the paper attesting to the accuracy of certain facts had no personal knowledge of the facts contained in the affidavit. Neither was there a notary seal attached at the time of signing for many of the documents.

In the case of an affidavit, it is a legal document that essentially replaces testimony. You can’t cross examine an affidavit, so a person filing that with the court has to have personal knowledge of the facts stated in the affidavit. That is what makes robo-signing illegal. It is perjury.

As part of its consent agreement, Ocwen must ensure that facts asserted in its documents about borrowers’ loans used in foreclosure and bankruptcy proceedings are accurate and supported by reliable evidence. Affidavits and sworn statements must be based on personal knowledge.

As a result of the robo-signing scandal, courts began to cast a more favorable view to legal arguments challenging the validity of foreclosure paperwork. As a result, if a homeowner is able to cast uncertainty regarding the required foreclosure paperwork, banks may be more willing to go further than they have in negotiating some type of mortgage modification – such as reducing principal, interest rates, or payments – rather than risk having to prove the accuracy of their documents in court.

If you can point out a defect in the paperwork, your leverage will increase. But even if you can’t, you may still get the lender to negotiate by raising the possibility of faulty paperwork. The lender may discover that its paperwork is less than stellar or that it would rather negotiate with you than prove the opposite in court.

Challenging a foreclosure in court in a judicial foreclosure state, bringing a lawsuit to stop a foreclosure in a nonjudicial foreclosure state, or even alleging documentation problems in an effort to negotiate with a lender can be daunting for a lay person. An attorney who has experience in foreclosure defense can be a valuable asset in defending your lawsuit.

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