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.
McCafferty also said that his firm no longer engages in this practice. He did not return a phone call from ProPublica inquiring about his firm's role in the case.
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. He also distinguished between documents with false signatures and those whose contents are materially false. If an attorney has allowed another person to sign court documents in the attorney's name without reviewing them, but the underlying evidence is accurate, Davis said it may be possible -- but is by no means certain -- that the pleadings could be corrected and re-submitted to the court.
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. LPS told Reuters that its clients can pick the law firms that represent them -- although court documents show that its clients signed agreements to use LPS's network of lawyers -- and said that its system did not encourage carelessness by law firms.
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.