Guest Post: So Why Did the Mortgage Servicers Use “Robo Signers”?

[Joanne98]

I received an e-mail from a correspondent I’ll call MBSGuy and I thought readers would find it informative. He’s been an expert witness in quite a few securitization cases (which is an area with relatively little in the way of case law, in contrast to real estate). And in case it isn’t obvious, to serve as an expert witness, you do have to know what you are talking about.

By MBSGuy:

I think Calculated Risk is a great web site and I read it every day. But for the most part, CR has avoided mortgage securitization market details. That was really Tanta’s turf.

CR has a post up today which is a troubling, in that it mentions “hysteria” and “misinformation” yet misconstrues critical issues. The article, “Why did the mortgage servicers use “robo-signers”?” despite being well intentioned, does not answer the question posed in its headline, adds no real information and is about two weeks late.

It is patently incorrect to say that the “foreclosure gate” issue is about “robo-signers”. A dozen top banks or servicers voluntarily halted foreclosure across much of the country because title insurers were no longer comfortable working on their foreclosure sales, borrowers were having increasing success challenging the foreclosures, their sub-contractors (such as Lender Processing Services and various foreclosure mill law firms) were being investigated for fraud and perjury, and news was starting to get out that the problems were much more widespread than had been previously reported.

The entire legal structure of foreclosure was coming undone. Robo-signers were just a manifestation of a much larger issue that was already becoming a problem.

http://www.nakedcapitalism.com/2010/10/guest-post-so-why-did-the-mortgage-servicers-use-robo-signers.html

[Angry Dragon]

1. The French say

"Off with their heads"

In the spirit of French strikes in the news

[Scuba]

2. Because they couldn't afford to have a conscience?

[dixiegrrrrl]

3. Oh...THIS explains why the rush to foreclose:

from one of the comments below the article:
"This is why lenders work so hard to foreclose now, rather than deal with the homeowner. They want that loan in default, since that triggers multiple insurance payoffs that covered the mortgage.
This is why HAMP only got 10% success for all that money.

This is why the banks really, really want to keep right on foreclosing, any which way they can. If these loans don’t payout through mortgage default, all the lender gets is the property and a lawsuit from the MBS investor, demanding their money back."

******************************************************************

Well, THAT answers one of my nagging questions about this mess.

[barb162]

4. Maybe because they thought most mortgagees wouldn't fight it

And apparently that is the case. If you've lost a job, can't make a monthly payment and the mortgage is upside down anyway, chances are the mortgagee is not going to hire a lawyer.

[Recursion]

5. This also means most houses sold after 2006 probably don't have clear titles

That's going to be screwing with house sales for years to come

[truedelphi]

6. In this day and age, with the Robo Signers being used, the only case law that anyone

Wanting to protect their home needs to know is the old adage known as the Fifth Amendment.

An American has the right to have a legal remedy before their property is taken away from them. Period.