I took a call yesterday from Jamie Smith-Hopkins, reporter for the Baltimore Sun, who writes about real estate in Maryland.
Ms. Smith-Hopkins has read my blogs here on SOT and on Active Rain and wanted my input on the state of foreclosures in Maryland and in particular how the allegations of deeds being executed by other than the named trustee would affect our industry. I listened with great interest as she told me about a paralegal formerly employed by Shapiro & Burson, LLP, (a member of the LOGS group)
http://www.logs.com/services/legal_services/foreclosure.htmlhas
who has filed a complaint with regulators and local law enforcement agencies wherein he states that he can personally attest to the fact more than 1000 deeds prepared by this firm were actually not signed by the named attorney, but rather were left in a pile for another attorney to sign. The deeds were then given to the complaining party and others, in their role as Notaries Public, and as employees of the firm to be notarized.
The affidavit filed by the complaining party (PDF) goes on to allege that other documents in the foreclosures were falsly executed by other than the named attorney (robo-signed) and that members of the staff had been authorized to sign the attorney's name to these documents.
We have long wondered about the possibility of Deeds actually being "robo-signed" and the affidavit and attached exhibits attached seem to confirm our fears that there is at least a good possibility that some deeds filed in our local land records are actually forgeries.
Ms. Smith-Hopkins was particularly interested in how this new wrinkle would affect those who have purchased property out of foreclosure (REO) or who are contemplating purchasing REO property. As a practical matter it was, until the filing of this complaint, unlikely that anyone would have necessarily questioned the validity of the Deed from the Trustee into the Bank (note holder). Now, though, with the allegations that the complaining party has made I have no doubt that many consumers will start to question the validity of these deed. And they should certainly make sure that their independent title agent, not one owned or operated by the foreclosure mill has had an opportunity to read and review each and every of the documents that are filed in the foreclosure case.
What then are we to do in Maryland if we are transferring property out of REO? We are title agents, not handwriting experts. Are we to assume that the deeds are correctly executed or are we to assume that the deeds have been forged?
As was stated in the article by Phillip Robinson, Esq., Executive Director of Civil Justice, a non-profit group in Baltimore that has filed suit against mortgage servicers to get them to drop foreclosure cases with improper documentation:
"It's a big deal when deeds don't have the correct signature on them because the deed is a forgery"
Yes, it is a big deal. The question remaining though is just how we in the title industry are going to deal with this issue.
I had a discussion with a friend yesterday who is an expert title attorney and he and I batted the question around as to what "easy fix" these mills would try to come up with regarding the allegations of forged deeds and we both came to the conclusion that they will likely try to file "confirmatory deeds" in the land records, very similar to the "fix" of robo-signed affidavits. I personally don't think that a "confirmatory deed" can correct a forgery on a Deed, but I would bet my last dollar that's exactly what they are going to try to do.
When these mills got caught with fraudulent document filings in the foreclosure files they were given a "free pass" by the courts and were allowed to file "corrective affidavits" acknowledging that the documents may not have been actually signed by the named attorney and were allowed then to proceed to foreclosure using these corrective affidavits. I did just hear a few days ago about an allegation that even the "corrective affidavit" in at least one file had not even been signed by the named attorney, so......
This mess will continue for years I fear, and at the same time am hopeful, that more and more of the mills will be called upon to answer to the shoddy work product, lack of ethics and absolute fraud on the court.
It is with interest that I note, again, that to my knowledge, none of the major mills working in Maryland who have been caught and who's attorneys have admitted to robo-signing practices in their firms and other irregularities have been sanctioned.
Most of the mills who have been named in class action suits etc. continue to be named by Fannie and Freddie and others as part of their network of foreclosure attorneys who are tasked with cradle to grave handling of foreclosures.
It seems no matter what they do they are just like teflon. No problem seems to 'stick' to them and they are just able to proceed along their merry way.
At the very least I am pleased that this paralegal had the guts to put these facts in the right hands. I am hopeful that these mills will ultimately be made to pay out of their pocket, to re-do the entire foreclosure in any case in which it has been proved that any document, including the Deed, has been forged.