Over the past month, we’ve seen lots of evidence that banks and others have taken shortcuts with paperwork to push foreclosures through.
Bank employees have acknowledged that they’ve signed thousands of foreclosure documents each month without much first-hand knowledge of what they contained. Other players in the foreclosure process, including law firms known as “foreclosure mills,” have taken similar shortcuts.
The revelations have prompted a joint investigation by the attorneys general in all 50 states and no fewer than five federal investigations into the mortgage lenders’ handling of foreclosures.
Much of the evidence that sparked the furor has come from a number of court depositions by employees or former employees at banks and foreclosure mills. We’ve gathered the most interesting of those documents in one place and highlighted the best parts:
Jeffrey Stephan is the GMAC employee whose deposition triggered the scandal. In a June 2010 deposition for a case in Maine, Stephan testified that he signed anywhere from 6,000 to 8,000—possibly even 10,000—foreclosure documents each month. Neither he nor his team verified the information in these affidavits as accurate, and the affidavits were not signed in the presence of a notary, which is required for them to be used as evidence in court.
Beth Ann Cottrell, a Chase employee, in a May 2010 deposition for a case in Florida, testified that she did not have her “own personal knowledge” of the documents she was signing, but that she had “personal knowledge that my staff has personal knowledge.” She acknowledged that although she signed off on documents attesting that a plaintiff had the right to foreclose on a homeowner, she did not know whether the statement was true. Cottrell also testified that when she received power of attorney granting her authorization to do so, she had signed documents on behalf of other companies.
Erica Johnson-Seck, an employee of OneWest Bank, testified for a case in Florida state court that she spent “not more than 30 seconds” executing each document and did not read each one before she signed it. Instead, Johnson-Seck testified that she relied on an outside document-processing contractor, Lender Processing Services, to vet the information in the documents, and she said that the documents were not signed in the presence of a notary.
- Though Herman John Kennerty, an employee of Wells Fargo didn’t sign as many documents as other robo-signers, in a May 2010 deposition taken for a case in state court in Seattle, he testified that he signed documents without checking anything but the dates. He was also questioned about one of his employees, Xee Moua, who, according to The Financial Times was also a robo-signer ($).
A former legal assistant at the Law Offices of David J. Stern, Kelly Scott, testified about some of the practices at that firm, which is currently under investigation for fraudulent, “foreclosure mill” practices. In an October 2010 deposition, Scott testified that key documents necessary to proceed with a foreclosure would be missing from a case file, and then the paperwork would appear when needed. Mistakes went uncorrected on the assumption that a judge wouldn’t notice. Paralegals acted as notaries, often notarizing documents even before they were signed. Then they’d be signed by the office manager of the foreclosure department, who “doesn’t review them.” Due to the volume of documents, that manager taught others to forge her signature and allowed them to sign on her behalf. Files that weren’t processed correctly would be hidden from clients who came to review the work. Scott also testified about Fannie Mae’s and Freddie Mac’s involvement with the law firm, noting that there was talk of a “quota,” and that Fannie and Freddie would push the firm to “pick up the speed.” As we’ve noted, the two government-controlled mortgage giants recently suspended business with the firm.
(Both Fannie and Freddie representatives denied having quotas for law firms handling their foreclosure cases, according to USA Today. Both Stern and the office manager declined to comment to CNN, but the firm’s lawyer, Jeffrey Tew, said, “No misconduct is occurring at David Stern’s law firm. … What the David Stern Law Firm has done is use modern technology to efficiently process legitimate foreclosures.”)
While the processes described in each of these depositions vary to some degree, several similarities exist: large volumes of documents, an emphasis on speed, reliance on someone else—either within the company or as an outside contractor—to verify the information sworn in the affidavit, some improper notarization practices, and the granting of signing authority so that one individual may sign for a number of companies.
Banks have consistently said the procedural flaws will be fixed, and some—Bank of America and GMAC—announced plans this week to resume some foreclosures.
Despite the types of practices described in these depositions—which point to flaws not only with servicers but also other players involved in the process—banks have maintained that no wrongful foreclosures or evictions occurred. Or, in the words of Jamie Dimon, CEO of JPMorgan Chase: “We're not evicting people who deserve to stay in their house.”