AP Report: Banksters' Dubious Docs Dating Back To 1990s Threaten Land Recording System Across U.S.; Title To Tens Of Thousands Of Properties Infected?

The Associated Press reports:

• Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than thought, tainting the deeds of tens of thousands of homes dating to the late 1990s. The suspect documents could create legal trouble for homeowners for years.(1)



• Already, mortgage papers are being invalidated by courts, insurers are hesitant to write policies, and judges are blocking banks from foreclosing on homes. The findings by various county registers of deeds have also hindered a settlement between the 50 state attorneys general who are investigating big banks and other mortgage lenders over controversial mortgage practices.

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• But now, as county officials review years' worth of mortgage paperwork, in some cases combing through one page at a time, they are finding suspect signatures — either signed with the same name by dozens of different people, improperly notarized or signed without a review of the facts in the paperwork — on all sorts of mortgage documents, dating as far back as 1998, The Associated Press has found.



• "Because of these bad titles, property owners can't prove they own the properties they think they bought, and banks can't prove they had the right to sell them," says Jeff Thigpen, the registrar of deeds in Guilford County, N.C. In Guilford County, where Greensboro is located, a sample of 6,100 mortgage documents filed since 2006 turned up 74 percent with questionable signatures.

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• Widespread robo-signing that stretches back a decade or more could create problems for homeowners. Regulators have so far not asked lenders to clean up the potentially millions of suspect documents filed in the past decade or earlier. That troubles some banking experts, including Sheila Bair, who until early July was chairwoman of the Federal Deposit Insurance Corp.



• "We do not yet really know the full extent of the problem," Bair said in written remarks to the Senate Banking Committee. She and others have called for a comprehensive study on the extent of the fraudulent signatures in mortgage documents.



• If documents with robo-signed signatures are challenged in court, judges could question the ownership of the properties, says Katherine Porter, a professor at University of California Irvine School of Law and an expert on consumer credit law. The consequences extend to homeowners in good standing when they try to sell.



• If invalid documents are discovered in the chain of ownership, it could delay the sale or make it difficult for buyers to get a mortgage because title insurers won't write a policy for the property, says Justin Ailes, vice president of government affairs of the American Land Title Association, a trade association representing the title insurance industry. Banks and other mortgage lenders won't write a home loan without title insurance.

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• "The banks are playing with the integrity of the land record system," says John O'Brien, the recorder of deeds from Salem, Mass. [...] O'Brien, the recorder of deeds from Massachusetts, says he's only responsible for one county out of more than 3,000 in the U.S. "Federal regulators with a lot more authority than me have to step up to the plate and help correct this," he says.(2)

For more, see Robo-signed mortgage docs date back to late 1990s (if link expires, TRY HERE).

(1) For additional background on the 'chain of title' problem arising by reason of robosigning, see:

• Congressional Testimony of Associate Professor Adam J. Levitin, Geo. U. L. Center, Robo-Signing, Chain of Title, Loss Mitigation, and Other Issues in Mortgage Servicing,
• Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage,
• Naked Capitalism: On the Clouded Title Mess and the Difficulties of Cleaning It Up.

(2) See Home Preservation Network: John O'Brien Calls On CEOs and AGs to Come to Salem:

• John O’Brien, Southern Essex County Register in Salem, Massachusetts has been leading the national effort to hold lenders accountable, and has refused to record robo-signed documents has invited the CEO’s of the nation’s largest banks and all of the state’s attorneys generals to come to the Salem Registry and view first-hand the damage that has been caused to thousands of Essex County homeowners’ chains of title.



• “It's like a tornado came through here,” said Register John O'Brien, referring to the financial havoc and damage done to property records at the Registry of Deeds. “Following any disaster, the powers that be generally show up to assess the damage. That is what I would like these major lenders and the Attorneys General to do – sooner than later,” O’Brien said.