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Foreclosure robo-singers testify they had little financial know-how

NEW YORK — In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in "foreclosure expert" jobs with no formal training, a Florida lawyer says.

In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some didn't know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew that they were lying when they signed the foreclosure affidavits and that they agreed with defense lawyers' accusations about document fraud.

"The mortgage servicers hired people who would never question authority," said Peter Ticktin, a Deerfield Beach lawyer who is defending 3,000 homeowners in foreclosure cases. Ticktin gathered 150 depositions from bank employees who say they signed foreclosure affidavits without reviewing the documents or ever laying eyes on them — earning them the name "robo-signers."

The deposed employees worked for the mortgage service divisions of banks such as Bank of America and JPMorgan Chase, as well as for mortgage servicers like Litton Loan Servicing, a division of Goldman Sachs.

Ticktin said he would make the testimony available to state and federal agencies that are investigating allegations of possible mortgage fraud. "This was an industrywide scheme designed to defraud homeowners," Ticktin said.

In one deposition, a foreclosure supervisor with Litton Loan couldn't define basic terms and testified that she didn't know what the required conditions were for a bank to foreclose or who the holder of the mortgage note was. "I don't know the ins and outs of the loan; I just sign documents," she said at one point.

Until now, only a few depositions from robo-signers have come to light. But the volume of new depositions will make it more difficult for financial institutions to argue that robo-signing was an aberrant practice in a handful of rogue back offices.

Bank of America responded by reaffirming that an internal review has shown that its foreclosures have been accurate. "This review will ensure we have a full understanding of any potential issues and quickly address them," Bank of America spokesman Dan Frahm said.

JPMorgan Chase spokesman Thomas Kelly said the bank has requested that courts not enter into any judgments until the bank had reviewed its procedures. But Kelly added the bank believes that all the underlying facts of the cases involved in the document fraud allegations are true.

"This just adds more uncertainty to the whole mortgage process, so buyers are asking themselves: Do I want to buy a home in this environment?" said Cris deRitis, director of credit analytics at Moody's Analytics.

Though some have chalked up the foreclosure debacle to an overblown case of paperwork bungling, at the center looms something much larger: the question of who actually owns the loans and who has the right to foreclose upon them. The paperwork issues being raised by lawyers and attorneys generals have the potential to blight not just the titles of foreclosed properties, but also those belonging to homeowners who have never missed a mortgage payment.

Foreclosure robo-singers testify they had little financial know-how 10/12/10 [Last modified: Tuesday, October 12, 2010 9:06pm]
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