Bank Of America Joins JPMorgan And Ally In Admitting It Never Validated Foreclosures Docs

Tyler Durden's picture

The third major bank joins JPM and Ally, which have already halted foreclosures, in admitting that one of its officials "signed up to 8000 foreclosure documents a month and typically didn't read them." Which means Bank of America is about to halt its foreclosure process. Which leaves us with the last big mortgage lender: Wells Fargo, which is quietly doing the opposite. As American Banker reports, Wells is actually curtailing extensions on residential short sales, in a last ditch attempt to accelerate the foreclosure process before it also falls  under the spotlight of fraudulent foreclosure disclosure. And Wells has more than everyone else combined, courtesy of its core market on the West Coast which, as it will soon be uncovered, has more mortgage fraud than any place in the known and unknown universe. As one reader wonders: "You think Wells is trying to hide more losses or are the banks switching to 100% bulk sale liquidations?" If indeed this is nothing than a last ditch attempt to dump as much as possible before the REO spigot is shut off, then shit is really about to hit the fan.

From the Associates Press:

A Bank of America official acknowledges in a legal proceeding that she signed up to 8,000 foreclosure documents a month and typically didn't read them.

The executive's admission adds the nation's largest bank to a growing list of mortgage companies whose employees signed documents in foreclosure cases without verifying the information in them.

Two other companies, Ally Financial Inc.'s GMAC Mortgage unit and JPMorgan Chase, have halted tens of thousands of foreclosure cases after similar problems became public.

The Bank of America executive said in a February deposition that she signed 7,000 to 8,000 foreclosure documents a month. "I typicallydon't read them because of the volume that we sign," she said.

Bank of America declined to comment.

Update: As expected, BofA has just confirmed it is halting foreclosures in the same 23 states in which Ally and JPM are also no longer operating.

From AP:

Bank of America is delaying foreclosures in 23 states as it examines whether it rushed the foreclosure process for thousands of homeowners without reading the documents.

Bank of America isn't able to estimate how many homeowners' cases will be affected, Dan Frahm, a spokesman for the Charlotte, N.C.-based bank, said Friday.

The move adds the nation's largest bank to a growing list of mortgage companies whose employees signed documents in foreclosure cases without verifying the information in them.

Two other companies, Ally Financial Inc.'s GMAC Mortgage unit and JPMorgan Chase, have halted tens of thousands of foreclosure cases after similar problems became public.

A Bank of America official acknowledged in a legal proceeding in February that she signed up to 8,000 foreclosure documents a month and typically didn't read them. The Associated Press obtained the document Friday.

The official, Renee Hertzler, said in a deposition in a Massachusetts homeowner's bankruptcy case that she signed 7,000 to 8,000 foreclosure documents a month.

"I typically don't read them because of the volume that we sign," Hertzler said.

She also acknowledged identifying herself as a representative of a different bank, Bank of New York Mellon, that she didn't work for. Bank of New York Mellon served as a trustee for the investors holding the homeowner's loan.

Hertzler could not be reached for comment.

A lawyer for the homeowner in the case, James O'Connell of Fitchburg, Mass., said such problems are rampant throughout the industry.

"We have had thousands, maybe hundreds of thousands of foreclosures around the country by entities that did not have the right to foreclose," O'Connell said.

The disclosure comes two days after JPMorgan said it would temporarily stop foreclosing on more than 50,000 homes so it could review documents that might contain errors. Last week, GMAC halted certain evictions and sales of foreclosed homes in 23 states to review those cases after finding procedural errors in some foreclosure affidavits.

After GMAC's announcement, state attorneys general in California and Connecticut told the company to stop foreclosures until it proves it's complying with their state laws. The Ohio attorney general this week asked judges to review GMAC foreclosure cases.

And in Florida, the state attorney general is investigating four law firms, two with ties to GMAC, for allegedly providing fraudulent documents in foreclosure cases.

In some states, lenders can foreclose quickly on delinquent mortgage borrowers. But 23 states use a lengthy court process for foreclosures. They require documents to verify information on the mortgage, including who owns it. Florida, New York, New Jersey and Illinois are the biggest states with this process.

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Dr. Engali's picture

Should be good for a positive move up on the banks monday. How many banks are they gonna close this weekend?

albion402's picture

Seems like it is time for these aggressive, mean-sprited bankers to face the music and read the damned documents.

max2205's picture

Why. Congress didn't read the health care bill. It's the new rubber stamp.

Shit says the same thing in each package any way. Ever see a buyer read those?! Noooo

Careless Whisper's picture

we are hearing a lot about the people who signed these docs. but what about the people who created them? where did they get the names and numbers to put on the docs?

OldTrooper's picture

The docs probably just get pulled out of the computer system - like anything else these days.  I doubt that anyone creating the docs looks at (or even has access to) the original file.

NOTW777's picture

this appears to be a contrived crisis.  all of these bankers with confessions?

cant believe all the mortgage documents are defective.  maybe an excuse to avoid the obvious - these debts will never be paid

NOTW777's picture

the mere fact that some foreclosure clerk "didnt read" a document does not invalidate it.  borrowers also did not read loan docs they signed and they took the money and bought the house.

ATG's picture

No more title insurance

RichardP's picture

The owner of the mortgage is the only entity entitled by law to foreclose.  Don't rush past that point.  It is the point on which all of this hinges.

The owner of the mortgage may also grant agency to some entity so they can foreclose on behalf of the owner.  This issue is not that the clerk didn't read a document.  It is that the clerk did not look through the folder to verify that a.) the bank was the owner of the mortgage, or b.) the true owner(s) of the mortgage actually granted agency to the bank to foreclose on their behalf.  Any foreclosure done by the bank where the bank was not the owner of the mortgage or was not granted agency by the owner(s) of the mortgage would be overturned when challenged in court.

These banks have stopped the foreclosure process until they can determine that they actually have the right (or agency) to foreclose.  If everything in a given folder is proper, the bank can resume foreclosure activity on the property named in the given folder.  The point is, those folders/mortgages used to create mortgage-backed securities probably don't have the appropriate paper work in them.  And after all of the slicing and dicing that went on to create multiple MBS's and tranches, there is the question of whether the current owners of the actual mortgage on a given property can be located in a timely fashion so that they can ALL grant agency to the bank to foreclose on the given property.

There is no question about whether the banks can locate the current owner(s) of the mortgage.  Those owners would be whoever they were passing the cash flow to when the mortgage payment came in.  Locating the owners and receiving agency from them will simply be labor-intensive and time-consuming - something that the banks have been trying to avoid because that costs money, money they don't have.  Consider a mortgage that was sliced into 100 pieces and sold to 100 different entities.  Now suppose the bank contacts all of them: 49 of them grant agency to the bank to foreclose, 51 of them don't grant agency.  What does the bank do in this situation, re. the party who is not making his mortgage payments?  This is just one of the ways that the plot has the potential to thicken.

In all of this, don't forget that the courts side against unjust enrichment.  It is not likely that any court will let any occupant keep a house without paying for it.

mynhair's picture

Don't forget:  most states require original documents.  Those were burned.

Rainman's picture

+100 different entities. The spiders get stuck in their own web. The delinquent bugs party on.

RoRoTrader's picture

Real meaning is the judical system is broken, broke and VERY FUCKING BROKE, right?

Bankruptcy of the Law.......and Ram (it up your ass fucker) Emanuel is running for Mayor of Chicago.......

Best guess, means Chicago gets it own printing presses, correct........U of Chicago......mid west FED.

Nihilarian's picture

In all of this, don't forget that the courts side against unjust enrichment.


...Still waiting for them to overturn suspension of mark to market.

RichardP's picture

... side against unjust enrichment of the little folk.

anonnn's picture

...sliced into 100 pieces and sold to 100 different entities. ...

Ummm... did each entity pay the County Recorder fees for the ownership changes?

The County Recorder Office is source for TITLE clearance docs...or was. [Is County Recorder fraud another BlackSwan?]

Have any County Recorders brought suit yet for fees uncollected?  Those uncollected fees [via MERS ] are more profits to mortgage swindlers...and  are taken from County infrastructure maintenance, etc. 

Geoff-UK's picture


Counties are busted from unemployed people not paying taxes, property values going into the gutter--and now some note-holder is going to CLAIM he owns the not instead of the guy who bought it 10 transactions ago?

Counties are gonna get wise to this, and lock up any foreclosure til they get theirs first.

The mess that this is can not be explained by any word in the English language--disaster of biblical proportions, dogs and cats living together, mass hysteria...nope, not good enough.

andybev01's picture

Cool! I'm gonna go and squat me a 4br/4bath tomorow!!

ozziindaus's picture

If the root of the problem is proof of title ownership, then who is entitled to receive mortgage payments from those who are current? I suggest we all dump our money into an escrow account until it's settled. 

RichardP's picture

As stated directly above, the root of the problem is not knowing whether a given folder actually contains proof of ownership of the mortgage - simply because those who were supposed to look through the folder before beginning foreclosure proceedings did not look.  Any completed foreclosure will be voided by the courts if someone can demonstrate that they bank did not have the required documents.

Banks are now saying time-out so that the looking can be done.  Some folders will likely contain the appropriate paperwork.  Others won't.  Since the courts are now looking, the banks want to be sure they proceed to foreclosure only where they have the required documents.  We can assume the banks will quietly go after the required documents in those instances where they don't have them.

tom a taxpayer's picture

RichardP - Thanks for explaining this complicated issue in clear language.

RichardP's picture

Thanks for the compliment, but I'm just summarizing what has been stated in other posts on this subject at ZeroHedge recently.

Tom Servo's picture

Friday after close, the real news starts coming out....might be a wild weekend!


How many on FDIC Fail Friday this week?

unum mountaineer's picture

Wakulla Bank, based in Crawfordville, Fla.

spartan117's picture

I think this is a thinly veiled message to all upside down homeowners that they can stop paying their mortgage.  Banks don't need the money anyway if QE 2.0 is a month away.

B9K9's picture
@ FEDbuster - The FED and Treasury must be going ape shit right about now.  Jamie Dimon and ilk must be buying Depends by the case lot.
My comment below is direct to the both of you and to any others who are looking forward to some kind of dollar debasement via QE X.0:

There isn't anyone at the (nominal) helm who didn't understood from the very git-go that the only possible way out was a resumption of organic credit growth. All the fraud, lies, deceit, corruption and violation of centuries old jurisprudence were justified (at least in their minds) by national security concerns.

The power-elite have always know that there was a black whole comprised of many different elements, one of which being title insurance, related to challenges in re-securitizing the ponzi. More importantly, they knew that they had at most two years in which to blow another bubble, anywhere/any kind, to get the herd moving once again in a speculative fashion.

If they had succeeded, there ain't a person alive (except for chronic complainers who are never happy) who would be bothering about "ancient" history while desperately trying to get in on the new party happenings.

QE was never meant to actually monetize anything. It was only part of a coordinated attempt, combined with control of mass media, expert triggering of key emotional drivers (eg optimism), appeals to authority/leadership, you name it, the whole gamut, aimed at manipulating overall general market psychology.

Their two years is now up - they have failed. What we are seeing now is the roll-over. Events are going to start accelerating faster as we appear to be a tad late with our appointment with destiny.

Just to re-iterate:

  • No one is going to get a free house. Live for free? Sure; it many take years, but eventually all of these mortgages will be rolled back to the point where clean title can be (re)established. Effect of the slow down in the r/e marketplace & overall economy - disasterous.
  • QE - Ain't gonna happen. The American people are now awake and are not going to stand around with puds in hand while the dollar and their remaining (if any) collective savings are evaporated. There's a lot of moaning about passive sheep, but humans are volatile creatures - look out when the mob begins moving in force.
  • There will be no more bailouts, there will be no real QE (other than small scale targeted manipulation eg POMO). Rather, we are going to enter a new period of staggered defaults, first on unfunded mandates, then onto entitlements, and then eventually debt instruments.

This ride is only just starting. Please note that today, right now, are the good old days.

centerline's picture

If I did this type of crap in my profession, I would be in a shit-load of trouble to say the least.  Amazes me that people will sign anything for a paycheck - without any conscience or thought of what the consequences might be.


This bitch is signing documents that actually kick people out of thier homes and did not push back against the volume to at least conduct due process.  She deserves to rot in hell.


I'll bet we are seeing only the front end of what is a monster wave of trouble.  At least I hope so.  This crap needs to get out in the open now.

ozziindaus's picture

How many from now on will claim they never read their 1040 before submitting it?

centerline's picture

This crap really is pisses me off.  Sometimes more than the normal state of angry that I live in (LOL).  Those of us who have always "played by the rules," avoided excessive risk, lived within our means just get repeated f***ed over the last 10 years+.  And ironically, it is this very demographic of people that is the last real thread holding this illusion up a little longer.  The funny part is that it is no mystery to most that the "American Dream" is just an illusion now.  Many boomers are just crossing thier fingers that the ship holds together long enough for them to collect thier pensions, SS, etc.  Welfare side of the equation wants the support to keep flowing.  The rich don't want to see everything they have evaporate.  Thus, only the remaining middle class has any real desire to see this farce end.  My middle-class self would rather risk the unknown on hopes of better future than continue down a path that I know leads to a lifetime of debt servitude and/or poverty.


(edit - ranting.... not commenting about the 1040 post.  That was funny by the way).

Bob's picture

When they do it in the presence of a Notary, then they'll have a real problem. 

Apples, oranges.  Slippery slope, not. 

mamg's picture

Or is it just some sort of disguise to prolong the M-2-Fantasy instead of floating everything on the surface of Earth.  QE2 is coming; so is TARP II, maybe they will do anything to hold back the realizing/booking of losses through the foreclosures.  Paying a few hundred millions to settle the cases in three months is way better than realizing Billions in losses.  If not, why now? At the end of TARP I?

Ragnarok's picture

We are being prepped for TARP2, all the spin out there in the last couple days that TARP1 went swimmingly and we are going to be paid in full from AIG, Citi, GM etc...  Plus, if the Fed is offering to buy the Treasury will issue more.

tip e. canoe's picture

"We are being prepped for TARP2"

methinks so too, especially after reading the articles from woodward's latest black tome in the white house.   it's all about the spin baby.

let's see how us sheeple react this time 'round.  fool me once, shame on you.   fool me twice?

reading's picture

Dont worry, those 5 title insurance companies are probably all backed by AIG

Panafrican Funktron Robot's picture

Just to echo a comment I made over on Reggie's analysis, it looks like this is the setup for the government taking over these notes, modifying, and enforcing (wage garnishment, IRS fun, etc.).  Bank stocks are actually probably going to look a lot prettier when this is all said and done. 

NotApplicable's picture

Bank stocks are actually probably going to look a lot prettier when this is all said and done.

Yep, both of them.

Cojones's picture

The good part is, believe it or not, that this happens in the US. Whenever a huge fraud takes place in the EU they simply change the laws so the TBTF's get out of harm's way.

Arkadaba's picture

You're joking ... right?

Cojones's picture

Nope.The EU is one of the most horriffic collectivist unions on the globe, as soon as 'the system' suffers, individual rights are abolished.

Arkadaba's picture

And the banker's collectivist union - how is that working?

Give me a break - I'm not even sure what you are saying.  Respond logically with numbers and facts and I might listen. 

Cojones's picture

As you should know, plenty of european banks have already been nationalised and even more banks have been pseudo nationalised. For example did you know that ING was forced by the state to takeon an a former union leader on the board  in exchange for a bailout?

The entire Fortis/ABN-Amro/Santander/RBS scam that took place? The fraudulent front running that was never even thoroughly investigated? The Spanish Cajas that are technically bankrupt but withstood the EU 'stresstest'? The Greek governmental fraud? Anglo Irish? Hyporeal? Lansbanki and Icesave?

The list is sheer endless.  Noone was ever prosecuted.

Why? Because all institutions were partly or entirely state owned now and any claims would have to be paid by them states since they just bailed them out of deep shit.

Kaiser Sousa's picture

i love it...fuck a banker...

now if everyone would default on all thier "obligations" to these institutions that only exist by virtue of the fact that we have all been saddled with debt that can never be repaid, this shit would be brought to a screeching hault...

resistance must me overwhelming an carried outin every form...

Precious's picture

These people should be fucking going to jail for this.  It is no different than other white collar forgeries.  Lock them up, and their bosses too.  CEO's went to jail for backdating stock options.  Where is the justice for these fraudsters.

centerline's picture

+1.  Criminal negligence.  First time in my life that I would be happy to see an army of lawyers!  Most of them are middle-class folks who are as pissed off as the rest of us.  It's going to get interesting for sure.

JohnKing's picture

Foreclosures will pick back up after November elections.

johngaltfla's picture

Shocked. Stunned. Amazed.

Ok, not so much. I've got customers and friends who have been mailing their Countrywide payments in on time, sometimes electronically for over a year.

And they still got foreclosure notices.

Care to wager how large the Wachovia Clusterf*ck is?

Yeah, bigger than WaMus and spreading to your favorite soon to die regional bank soon.

Gee, when does this start to impact the REITs boys and girls? I mean after all, a building with 50% of the tenants in default (over and over again) can't justify a 100% valuation on the construction of these trusts now can it?

NotApplicable's picture

Now why would a bank want all those houses, when they are getting their contracted revenue stream from them???

Because they are going to sell them back to Fedgov when they create the new & improved Fannie Mac Daddy.

All your house R belong to us. Comrade.