Foreclosuregate Update: Falsified attorney signatures cast doubt on foreclosure documents

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Posted by AzBlueMeanie:

Sasha Chavkin at ProPublica reports on the latest aspect of the Foreclosuregate scandal. False Attorney Signatures Cast New Doubts on Foreclosures:

Many foreclosures have been thrown into question because of flawed documentation such as inaccurate affidavits describing a mortgage's history. But three recent court cases point to another type of flaw in foreclosure filings that could place thousands more cases in doubt: false attorney signatures on court documents.

Experts said that foreclosures that relied on court documents with the signatures of attorneys who in fact neither signed nor reviewed them are vulnerable to being thrown out in the 23 states in which foreclosures must be approved by a judge.

"What you have is a non-lawyer engaged in unauthorized practice of law, and that would be a serious problem in terms of that foreclosure judgment withstanding that kind of attack," said Max Gardner, a consumer bankruptcy lawyer and an expert on foreclosures. While the extent of the practice remains unknown, filings in the recent cases allege that law firms that specialize in foreclosure systematically directed their clerical staff to sign documents in the name of attorneys.

A suit filed this fall in a federal court in Pennsylvania, on behalf of a homeowner facing foreclosure from the Bank of New York, prompted a striking admission by the bank's lawyers. In a deposition cited in the lawsuit, attorney Gary McCafferty — whose firm specializes in representing lenders in foreclosure cases — acknowledged that many documents his firm submitted to court with his signature had in fact been signed by administrative staff and that he had neither read nor reviewed them.

"Complaints were filed without an attorney seeing them," McCafferty said in the deposition.

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False attorney signatures are different from robo-signing, in which mortgage company officials sign large numbers of foreclosure documents without checking the accuracy of the details. Bob Davis Jr., a Pennsylvania lawyer who concentrates on the defense of attorney ethics cases, said that falsified signatures from lawyers on case pleadings can void a foreclosure by rendering key documents invalid before the court.

"In litigation the signature of an attorney means something very specific: that they've read the material and attest that it's truthful," Davis said.

Davis said that while it is not good practice, it is permitted to use a name stamp or have another person physically sign an attorney's name, but only if the attorney has personally conducted due diligence and determined that the material is truthful.

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In some cases, false attorney signatures have led to foreclosures being dismissed. In October, the Baltimore Sun reported that lawyers from two Maryland firms that handle foreclosures acknowledged that they had not in fact signed many affidavits filed with their signatures and had submitted "corrective affidavits" to try to remedy the problem. The two lawyers, who have reportedly filed more than 20,000 foreclosure cases in Maryland since 2008, told the Sun that they had reviewed the content of all their affidavits although they did not always sign them themselves.

However, one of the lawyers, Jacob Geesing, agreed to dismiss five foreclosure cases after an attorney representing homeowners filed motions last November to dismiss them on the basis of "fraud on the court" related to false attorney signatures.

A class action suit in federal court in Mississippi against the foreclosure contractor Lender Processing Services includes similar allegations. The suit, which the U.S. Justice Department has joined as a plaintiff, charges that LPS engaged in unauthorized practice of law, according to an investigation by Reuters.

Reuters obtained legal testimony and internal LPS documents that show foreclosure documents were "mostly prepared by clerical workers, not lawyers," and that LPS created a ratings system that rewarded law firms that processed documents quickly, often at the expense of being reviewed by lawyers.

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Gardner, the bankruptcy attorney, said that he believes the problem is widespread because it results from the business model employed by many law firms that specialize in foreclosures.

"They have a small number of attorneys and a very large back office," Gardner said. "The first time an attorney knows anything about a case in these kinds of operations is when someone like me files a response."

Lawyers who are found to have authorized fake signatures could face sanctions, such as reprimands, or suspensions of license, said Dianne Coscarelli, a partner at the firm Thompson Hine and the vice-chair of the American Bar Association's Real Estate Finance Group.

Gardner, the consumer bankruptcy lawyer, said he expected that false attorney signatures will become the target of increasing scrutiny. He said that additional class action suits against law firms that specialize in foreclosures, sanctions by state bar associations against offending lawyers, and investigations of the practice by state attorneys general are all likely possibilities.

"I think this is the next huge issue," Gardner said.

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AZ BlueMeanie
The Blue Meanie is an Arizona citizen who wishes, for professional reasons, to remain anonymous when blogging about politics. Armed with a deep knowledge of the law, politics and public policy, as well as pen filled with all the colors stolen from Pepperland, the Blue Meanie’s mission is to pursue and prosecute the hypocrites, liars, and fools of politics and the media – which, in practical terms, is nearly all of them. Don’t even try to unmask him or he’ll seal you in a music-proof bubble and rendition you to Pepperland for a good face-stomping. Read blog posts by the infamous and prolific AZ Blue Meanie here.

1 COMMENT

  1. http://www.change.org/petitions/view/request_for_congressional_foreclosure_panel_to_examine_foreclosure_lawyers#

    LAWYERS WHO FILE FORECLOSURES SHOULD ALSO BE INVESTIGATED

    Foreclosure lawyers are officers of the court; knowledge of applicable laws and civil procedure is not required from mortgage lenders, nor loan servicers. Inadequate or questionable foreclosure leads to useless property deeds that impede real estate sales; title insurance companies reluctant to cover foreclosed properties; mortgage default claims are being disputed due to defective foreclosures. . .Sample of fraudulent foreclosures:

    –Deliberately use of defunct lenders or lenders without “standing” to execute false civil and bankruptcy foreclosure proceedings.
    – Create and conceal malpractice, delay foreclosures, engineer billable litigation fees.
    – Orchestrate sham foreclosure auctions; property never acquired by lenders, but by ‘straw buyers’
    – Commit actionable wrongs (unfair debt collection, fraud, various torts) that give rise to lawsuits
    – Engage in self-dealing foreclosures by which some lawyers themselves gain foreclosed properties
    –Foreclosures via names of defunct lenders, illegally recorded property deeds, flipping, blighted communities
    – Unconscionably create false deficiency judgments against property owners after straw buyers acquire homes for pennies on the dollar
    – Intentionally false Bankruptcy court “Motion to Lift” and “Proof of Claim” on behalf of NON-EXISTENT lenders, concealing fact of “non-secured” mortgage debt.
    –Involved in fraudulent collection of property damage and mortgage insurance for illegally foreclosed homes
    –Fraudulent foreclosures abet loss of property taxes to city revenue, rodents, vagrants
    – Thousands of families made unlawfully homeless from null foreclosure proceedings.
    **more: Request for Congressional Foreclosure Panel to Examine Foreclosure Lawyers

    http://www.change.org/petitions/view/request_for_congressional_foreclosure_panel_to_examine_foreclosure_lawyers#