According to documents filed in a New York federal court case this month, the country’s largest mortgage servicer is accused of setting up procedures internally that allowed them to produce phony foreclosure documents on-demand.
The explosive allegations against Wells Fargo are detailed in a seemingly innocuous homeowner bankruptcy. Within that filing, though, is a 150-page procedures manual intended for use by Wells Fargo foreclosure attorneys. It was created in November 2011 and updated in late February 2012.
Our Miami foreclosure defense attorneys have learned that among the details in that manual is a specific procedure outlined for processing mortgage notes that lack any endorsements and obtaining endorsements for those notes.
More simply put, any bank that was initiating a foreclosure would have had to produce documents showing that it owns the loan, and would therefore have the right to evict the family in that home. Absent that paperwork, however, a foreclosure could not be initiated. Because of the irresponsible way so many banks – including Wells Fargo – handled mortgage loans in the years leading up to the burst of the bubble, scores of loans lacked the proper documentation. So apparently, the solution the company found was to forge new ones.
This isn’t the first time such practices have come to light. However, it is one of the first times that concrete proof has been provided that such practices were not just oversights or mistakes, but internal directives as recently as 2012.
Wells Fargo is responsible for servicing approximately 9 million loans nationwide.
A representative for the bank denied that the manual is any indication of wrongdoing, saying that no mortgage could be endorsed without proper authority.
But this is one of those situations that has long been predicted by consumer advocates, foreclosure defense attorneys and forensic accountants – many of whom for years have suspected that banks were improperly creating documents that would prove loan ownership.
In many cases, our foreclosure defense lawyers have noted that proper endorsements are lacking in an original foreclosure filing – where they should rightly be – only to suddenly turn up in the hands of the bank’s foreclosure team. We call these, “ta-da endorsements,” because they seemingly appear like magic.
This might seem like a minor technicality. However, the truth of the matter is that correct proof of ownership is essential for the foreclosure process to be completed with the legal transfer of a securitized loan.
These documents, if accurate, would be the first time this particular practice has been proven in court.
According to The New York Post, the documents appear to offer a step-by-step process for bank foreclosure lawyers and their “Default Docs Team.” In other words, entire groups were dedicated to making sure that blank endorsement documents did not hinder the foreclosure process.
Whistleblower accounts have made many of the same allegations. MSNBC.com, for example, offered up a detailed account in April 2012 of Wells Fargo’s alleged failures to properly verify that it did owned the loans upon which it was initiating foreclosures. Additionally, allegations of widespread foreclosure document tampering was described in the Naked Capitalism blog in the spring of 2013.
Still, it’s worth noting that while this manual was still in effect, Walls Fargo was wrangling with federal regulators over a settlement regarding its alleged foreclosure abuses during the fallout of the housing crisis.
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. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Debt Warriors with Bruce Jacobs,” discussing foreclosure topics that matter to YOU.
Wells Fargo made up on-demand foreclosure papers plan: court filing charges, March 12, 2014, By Catherine Curan, The New York Post
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$1.25 Billion Settlement for Morgan Stanley to Resolve Mortgage Fraud Claims, Feb. 10, 2014, Miami Foreclosure Lawyer Blog