ROBOSIGNING IN RESALES AND REFINANCING: MASSIVE TITLE PROBLEM

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In reviewing the title chain going back further than the current homeowner in foreclosure, I discovered some familiar names, like Linda Green, who signed a satisfaction of mortgage on one deal that was “refinanced.” Up until now, we have been focused strictly on the current customer who is the current homeowner or last person to own the property before it was sold at “auction” for a “credit bid.”

The reason we limit our search to a specific loan (which is why it is called a loan specific title search) is that going back further takes a lot more time and work, it is more expensive, and the Judges wrinkle their noses at the prospect of dredging up old transactions in which the homeowner in front of them was not a party. But like it or not, these findings indicate that Judges are going to need to take a close look at issues, if they are presented to the Judge, when there is a question of clear title back before the current homeowner got involved.

Based upon my sampling, it would appear that the use of “surrogate signors” (robosigners) was pandemic in the processing of transactions in which there was a sale of a home or refinancing of a home in which the “old” mortgage was replaced by a “new” mortgage. It makes sense since the old originator was often not even in existence at the time of the new transaction.

The “old” mortgage appears to be signed in many cases by a party that is a known robosigning name, in which it is doubtful that that Linda Green signed the document, doubtful that whoever did sign the satisfaction of mortgage on the “old” loan ever had the authority to do so, or ever knew what they were signing.

It gets worse. If the sampling is correct, then that means the payoff on the “old” mortgage went to the wrong party and the entity that signed the satisfaction of mortgage (or release and reconveyance in non-judicial states) was also the wrong party. That means there is a giant hole, not just a break, in the chain of title. It also means that for those who entered into such transactions, they might think they only have one mortgage, but they might have two or more mortgages that remain unsatisfied in their title chain.

The title companies are well aware of this issue, based upon my interviews with people who are in the title business, including the head of one title company. Whose obligation is it to clear the title and when should the effort be made to clear the title? Normally the industry practice is to take care of title problems as soon as they are discovered to avoid consequential financial damages to the homeowner when it comes time to resell or refinance the property. This process could take years of litigation. The old title policies don’t contain exclusions for securitization claims, so you can apply pressure to them to clear up the problem. But I already know that the line they are going to use is that “we did not insure that risk.”

The buyers of foreclosed properties should look carefully at the title policy they are receiving. It is almost guaranteed that the title policy excludes the risks outlined in this article. You need to argue for removal of those exclusions from the commitment and the policy. It is unfortunately necessary to check on the title company and order your own title search from someone who understands about robosigning, title, and securitization. Going back to previous owners is more expensive than the usual loan specific title search we do. So we are working up a service that fulfills this need in the least expensive way possible.

In the meanwhile, if you want your title policy analyzed by one of our experts, you can write to neilfgarifeld@hotmail.com and you will be given a quote for the work to be done. It will include a title search going back in time to as far as the 1990’s and an analysis of the documents of record to detect any potential problems in the title chain caused by claims of securitization. Your attorney, if you have one, should be questioned before you enter into any of these transactions. If he or she is unfamiliar with the issues of robosigning, securitization and fabricated documents, you made need to search for someone who does understand it.

Tags: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, linda green, LOAN MODIFICATION, modification, quiet title, refinancing, resales, rescission, RESPA, robosigning, securitization, TILA audit, trustee, WEISBAND
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