Wells Fargo Comes Under Fire in Foreclosure Crisis
Wells Fargo Comes Under
Fire in Foreclosure Crisis
As a handful of the nation's largest banks and loan servicers have come under scrutiny for rubber-stamping thousands of foreclosure documents without verifying their contents as required by law, Wells-Fargo, the second largest US loan servicer, has remained above the public outcry. As Bank of America, JPMorgan Chase, and GMAC have voluntarily halted foreclosures, Wells Fargo has taken no such action and maintains that its procedures have no problems.
A sworn deposition from one of its loan officers, however, suggests otherwise. Xee Moua said that she had signed as many as 500 foreclosure documents a day while working for the bank. She revealed that the only information she verified regularly was that her name and title were printed correctly on the documents.
When asked if she verified the accuracy of the principal and interest that Wells Fargo calimed was owed by borrowers, a vital step in the legal processing of foreclosures, Ms. Moua answered: “I do not.” Moua nevertheless repeatedly signed affidavits claiming she had “personal knowledge of the facts regarding the sums of money which are due and owing to Wells Fargo”. These affidavits were used in lawsuits filed by Wells Fargo to repossess homes.
Moua stipulated that it was her understanding the documents in question had been reviewed by lawyers before reaching her desk. Moua's statements, made in a deposition on March 9th as part of a lawsuit in Pam Beach County, Florida, represent the latest twist in a developing problem that raises questions about the foreclosure filing practices of major US loan servicers. The attorneys general of all 50 states have responded by launching a joint investigation into the matter, headed by Iowa Attorney General Tom Miller.
The banks continue to maintain that any problems are strictly procedural and have not led to any improper foreclosures, while critics argue that the problems with paperwork are indicative of the banks' efforts to cut corners and speed the process at the expense of struggling homeowners. The issue could lead to the discovery of deeper issues that might throw the entire foreclosure process into turmoil. Record keeping has fallen way behind the increase of mortgages and securitizations that began with the housing boom, leading to a situation where many lenders lack legal documents necessary to foreclose on delinquent borrowers.
Back before the practice of bundling mortgages into securities, mortgages were filed with the local county land registry when they were originated and the records were updated every time the loan changed hands. This practice created an easily trackable paper trail. Securitization has created a situation where mortgages change hands much more frequently, and banks have been either unable or unwilling to keep up with the increased paperwork load.
In one case, a judge in a Texas court ruled that the bank had no right to foreclose on a man's home because it couldn't prove it owned the loan. “We mistakenly characterised the loan as ours when it was owned by Freddie Mac,” Wells Fargo said. Wells Fargo has, so far, declined to comment directly on Ms. Moua's statements but maintains that its records showed foreclosure affidavits to be accurate.
The bank added: “When we find team members who do not follow procedure, we fix what is done incorrectly. Until this case is resolved, we should keep in mind that a deposition does not suggest a wrongful foreclosure.”
As a handful of the nation's largest banks and loan servicers have come under scrutiny for rubber-stamping thousands of foreclosure documents without verifying their contents as required by law, Wells-Fargo, the second largest US loan servicer, has remained above the public outcry. As Bank of America, JPMorgan Chase, and GMAC have voluntarily halted foreclosures, Wells Fargo has taken no such action and maintains that its procedures have no problems.
A sworn deposition from one of its loan officers, however, suggests otherwise. Xee Moua said that she had signed as many as 500 foreclosure documents a day while working for the bank. She revealed that the only information she verified regularly was that her name and title were printed correctly on the documents.
When asked if she verified the accuracy of the principal and interest that Wells Fargo calimed was owed by borrowers, a vital step in the legal processing of foreclosures, Ms. Moua answered: “I do not.” Moua nevertheless repeatedly signed affidavits claiming she had “personal knowledge of the facts regarding the sums of money which are due and owing to Wells Fargo”. These affidavits were used in lawsuits filed by Wells Fargo to repossess homes.
Moua stipulated that it was her understanding the documents in question had been reviewed by lawyers before reaching her desk. Moua's statements, made in a deposition on March 9th as part of a lawsuit in Pam Beach County, Florida, represent the latest twist in a developing problem that raises questions about the foreclosure filing practices of major US loan servicers. The attorneys general of all 50 states have responded by launching a joint investigation into the matter, headed by Iowa Attorney General Tom Miller.
The banks continue to maintain that any problems are strictly procedural and have not led to any improper foreclosures, while critics argue that the problems with paperwork are indicative of the banks' efforts to cut corners and speed the process at the expense of struggling homeowners. The issue could lead to the discovery of deeper issues that might throw the entire foreclosure process into turmoil. Record keeping has fallen way behind the increase of mortgages and securitizations that began with the housing boom, leading to a situation where many lenders lack legal documents necessary to foreclose on delinquent borrowers.
Back before the practice of bundling mortgages into securities, mortgages were filed with the local county land registry when they were originated and the records were updated every time the loan changed hands. This practice created an easily trackable paper trail. Securitization has created a situation where mortgages change hands much more frequently, and banks have been either unable or unwilling to keep up with the increased paperwork load.
In one case, a judge in a Texas court ruled that the bank had no right to foreclose on a man's home because it couldn't prove it owned the loan. “We mistakenly characterised the loan as ours when it was owned by Freddie Mac,” Wells Fargo said. Wells Fargo has, so far, declined to comment directly on Ms. Moua's statements but maintains that its records showed foreclosure affidavits to be accurate.
The bank added: “When we find team members who do not follow procedure, we fix what is done incorrectly. Until this case is resolved, we should keep in mind that a deposition does not suggest a wrongful foreclosure.”
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