Although Wells Fargo has steadfastly maintained that it does not have the robo-signer issues that have plagued so many other major lenders, it is backing down and refilling foreclosures in Maryland starting today[1]. According to a statement released by the lender on Wednesday, there are potential flaw in some pending Maryland foreclosures that will mean that the entire process needs to be dismissed and restarted. GMAC told Maryland courts last Friday that it would be dismissing around 250 foreclosures in the state in order to avoid a class action lawsuit, and it looks like Wells Fargo has made a similar decision.
Because the lenders are dismissing the foreclosures before a suit has been brought, they will be able to restart them without litigation and title disputes. However, this is simply the lesser of two evils as far as the banks are concerned, since there will likely be additional delays and costs due to new requirements that Maryland courts hope will keep foreclosures valid and insure that homeowners are protected. Any foreclosures initiated now in the state have a mandated period of homeowner-lender mediation, which will also slow the process down.
According to Wells Fargo, it has been dismissing all foreclosures with associated foreclosure affidavits signed by a Wells Fargo employee. However, those signed by outside foreclosure attorneys are still in effect. Wells Fargo insists that the bank “took the action to ensure we met all state requirements” and emphasized that all dismissed foreclosures have been “immediately restarted.” At this point in time, the Wells Fargo class action suit, unlike the GMAC suit, has not been dismissed, but a hearing is set for next month.
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[1] http://online.wsj.com/article/SB10001424052748703951704576092513094230584.html?mod=googlenews_wsj
