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Wells Fargo Case Belies Claim It Always Verifies Mortgage Paperwork

Wells Fargo says it has avoided much of the foreclosure paperwork problem because employees verify every mortgage document they sign, but a bankruptcy case shows that's not always the case.

Wells Fargo says it has generally avoided the foreclosure paperwork scandal plaguing the nation’s banks because its employees personally review and verify every document that they sign. But a previously unpublished deposition details how that didn’t happen in at least one case. In the deposition taken last summer, a bank employee admitted to submitting unverified documents to a federal bankruptcy court in northern Texas twice in the same case, even though she signed off that the documents, swearing that they were “true and correct.”

The employee said she “couldn’t guestimate” how frequently she submitted court documents without personally verifying the information.

The new deposition is from the Chapter 13 bankruptcy case of Texas residents Frederico and Herelinda Guevara. In the deposition, a Wells Fargo employee named Tamara Savery said she twice submitted documents to the court about who owned the Guevaras’ loan without personally researching or reviewing the underlying documents. She said she relied on the “expertise of others” when signing the legal paperwork.

The deposition did not delve into Wells Fargo’s wider practices. But in other cases, Wells Fargo employees have said they signed numerous affidavits a day without first verifying the information.

Wells Fargo spokesman Jason Menke said there’s no problem with the bank’s paperwork process. “We do not have a system in place where one person signs the affidavits while others do the actual reviews,” he said. “We are satisfied that our foreclosure affidavit process is sound.” On Wednesday, Wells Fargo posted record profits, saying "sound and accurate" practices allowed it to skirt the growing foreclosure document scandal.

Other major banks have halted foreclosures around the country in order to review documents, and the attorneys general of every state as well as the federal government have launched investigations into banks’ foreclosure-related practices. Mortgage documents submitted in court for foreclosures and bankruptcies have had a range of problems, from forged signatures to factual errors to fraudulent notarizations.

In bankruptcy court, a bank must have what’s called legal standing to get repaid on a mortgage, either by proving it owns the loan or by proving that it is the servicer of the loan. After all of the shuffling as loans were bundled up and sold on Wall Street, banks have had a difficult time producing the documents to prove their standing.

The Guevaras’ attorney, Thad Bartholow, said he deposed Well Fargo’s Savery to clarify conflicting responses about who owned the Guevaras’ loan. Savery initially signed a legal document saying, “Wells Fargo owns the Guevaras’ loan.” A week later, Wells Fargo submitted an amended document, also signed by Savery, stating, “Wells Fargo is currently servicing the Guevaras’ loan for Freddie Mac and does not own the Guevaras’ mortgage loan.”

Even when signing the updated document that restated who owned the loan, Savery said she still did not personally verify the information. Savery said she did not see the original paperwork until months later, on the day before the deposition.

The Guevaras’ lawyer said the mistaken claims in federal court were brazen. “It’s one thing to do it with deed records that nobody sees,” said Bartholow. “But this is active litigation. Do they think I’m not going to notice?”

Banks have been saying that the paperwork mess is just a technical “blip” and does not have any meaningful consequences. In the Guevaras’ case, however, the judge erased nearly $19,000 of arrears because Wells Fargo did not establish that it had the legal right — either as owner or servicer for the Guevara’s mortgage—to submit claims to the court.

Karen Weise

Karen Weise was an intern at ProPublica and a recipient of the Mark Felt Scholarship for Investigative Reporting at UC Berkeley's Graduate School of Journalism.

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