Why Is Robo-Signing in Miami Foreclosures Still Ongoing?

The Obama administration continues twisting the arm of every attorney general in the nation to settle with banks over robo-signing and other offenses during the housing burst, which caused strategic defaults, short sales and millions of foreclosures in Miami and elsewhere.

As San Francisco Bay View points out, the settlement with banks that the government is pushing for would essentially be a slap on the wrist and would prohibit states from bringing lawsuits against them.

Robo-signing is where employees signed other people’s names under titles they didn’t own to confirm facts they didn’t know were true. The practice dates to the turn of the century and could have invalidated tens of thousands of housing titles.
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Miami foreclosure lawyers have fought many foreclosure cases where robo-signing was used because it is such an unethical practice. When a person’s home is at stake, the last thing that should happen is a bank using improper techniques to try to steal it away.

According to the news article, the settlement would let bank officials get away with criminal acts that the average person would be convicted for committing. They include fraud, tax evasion, securities violations and forgery. The author questions whether banks did this for so long because of the volume of cases or because it was profitable.

Some analysts believe that robo-signing was done in support of the shadow banking system, which some say is bigger than the traditional banking system. Securitized mortgages, as one theory goes, are pawns used in the “repo market.” Repos are quick-moving sales and collateral repurchases that require mortgage notes to be free. So, they are not assigned until a loan defaults, at which time they are robo-signed to the trusts in order to foreclose on the property.

This secondary banking system is based on high-level debt, such as mortgage-backed securities and Treasury debt. Analysts say this secondary market is essential for traditional banking because without it banks wouldn’t lend and credit wouldn’t be available.

Mortgage Electronic Registration Systems hid these transactions and allowed houses to be bought and sold quickly while getting around local laws that govern recording these transactions. MERS would be the name the property was recorded under, though it may have changed hands five times.

As Miami foreclosure defense lawyers and others began questioning whether MERS had any ability to foreclose, judges have increasingly said it doesn’t. And after officials told mortgage servicers that to get reimbursed under the federal program HAMP, the servicers would have to show the loan had been assigned to the trust. In response, robo-signing went viral.

And as a result, this process broke violating the terms of trusts as well as state real estate law. The banks also cannot comply with tax laws for mortgage-backed securities. The author points out that the shadow banking system is flawed because the collateral is both owed to the borrower and the depositor at the same time. What happens when both demand their money at the same time?

The article points out the obvious flaws in our banking system and shows that homeowners nationwide have been deceived and ripped off. Many Miami foreclosures were done through robo-signing and other illegal practices, yet the court system has been slow to hold banks accountable for their actions. As more and more evidence comes out, Miami foreclosure defense lawyers will bring this to judges in order to save homes from foreclosure.

If you’re battling foreclosure in Miami or the surrounding areas, contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.

More Blog Entries:

Why Isn’t Government Prosecuting Big Bank Officials For Miami Mortgage Fraud?: December 15, 2011
Additional Resources:

Why all the robosigning?, by Ellen Hodgson Brown, San Francisco Bay View