When problems in the foreclosure process caused banks to temporarily freeze foreclosures last fall, the focus was on improperly signed foreclosure affidavits—legal documents used when foreclosure are required to go through courts.
But as we’ve noted, most states are “non-judicial” states, meaning foreclosures can proceed without a court order. And turns out, those states—where the process lacks judicial supervision and homeowners have less recourse to fight back—also seem to have problems with banks using robo-signers and taking other foreclosure shortcuts, American Banker reports.
Typically in non-judicial states, a third-party trustee hired by the lender or servicer is required to issue a notice of default to start the foreclosure process. In a January 4 deposition, however, Stanley Silva, a title officer in Nevada testified that he signed those notices without knowing whether anything in the document is true. From the deposition:
Q Are you familiar with the Nevada non-judicial foreclosure statute?
A Only operationally.
Q Is it your understanding that the Nevada non-judicial foreclosure statute requires that the company on whose behalf you're signing a notice of default has the authority to foreclose?
A I'm not familiar with that language.
Q Is it fair to say you have no understanding at the time you execute a notice of default whether the company on whose behalf you're actually signing that document has any authority to foreclose on the property?
A I don't, no.
Q You don't know whether they have any authority to foreclose?
A Nothing direct. You know, I'm signing what gets sent, so –
Asked what documents he reviews prior to signing the default notice, Silva responded, “We don’t review any documents.” He also said he’s “not aware of” the channels that prepare the documents before he signs them:
Q So who told you the recording was requested by LPS Title Company of Nevada?
A I’m not understanding your question. Nobody told me anything.
Q Oh, this gets back to your saying that you’re merely signing a document, it doesn’t mean you’re saying anything in the document is true; right?
Silva was deposed as part of a lawsuit against Wells Fargo, in which he testified that he signed the default notice on behalf of his employer, Ticor Title, which was signing on behalf of another LSI Title, which was signing as an agent for National Default Servicing Corporation, an agent for Wells Fargo. Homeowners attorneys in several non-judicial states have argued that these arrangements may not be legal. From American Banker:
Walter Hackett, a lawyer with Inland Counties Legal Services, in San Bernardino, Calif., and a former banker with Bank of America Corp. and Union Bank, has filed several cases contesting notices of default, on the grounds that the employees signing such notices were working for companies that are not the noteholders — or even their appointed agents.
"A huge percentage of notices of default and notices of trustee sales are legally questionable and probably void," Hackett said. "Nobody with the authority to trigger the nonjudicial foreclosure process is triggering it — only third parties who claim they have the right to do so are triggering it."
All of companies either declined to comment or did not respond to American Banker’s requests for comment.