Saturday, October 16, 2010

Why the Robo-Signers?

John Carney points to an important Calculated Risk post that is worth reading if you want to understand why robo-signing came about.

John goes a little bit further and claims that this "undermines forclosure hysteria." I don't think so. What needs to be done, on a case by case basis, is to see if the proper documentation for a foreclosure exists and if it is accurate. Beginning and end of story.

I had a long conversation with a bankruptcy attorney who told me that from his experience there are probably document problems with about 50% of foreclosure cases. He said banks were very sloppy with the paperwork. He said that during the boom real estate years an entire generation of poorly trained low skilled clerks were brought in to handle the paperwork.

Interestingly, he told me that Bank of America, whose stock has been pounded because of foreclosure gate, in his experience had documents that were for the most part in order.

As for outright fraud, he said it was most prevalent from the side of the original buyers of the homes. He said they lied about everything, income, jobs, financial status etc.

1 comment:

  1. I don;t know about real estate but I used to be a lawyer on Wall St in secured finance. Responsibility for getting executed documentation, filing UCC's and other security interests, etc fell on junior associates who were very overqualified and quite capable of getting it done. Hundreds of times we had closing lists, little piles of documents on the tables, I personally went down the line and saw that everything was signed and later filed if necessary. I suspect that if it wasn;t done it was because someone in a position to direct things did not want it done. Look the local Toyota dealer may have a big sale and it may take ninety minutes to see a salesman but after you buy I'll bet everyone gets a registration and title. There is no "we were too busy" excuse.