FDIC Chairman Sheila Bair says that it will probably be a long time before the true extent of the damage done by robo-signers within the lending and a foreclosure industry is actually known[1]. Although Bair praised the federal regulators currently involved in investigating the issue of “deeply flawed [mortgage] servicing practices,” she called the overall effort “narrow” and warned that “there appears to be the potential for further losses” in a speech to the Senate Banking Committee about the implementation of the Dodd-Frank act. She also warned that the housing market could not recovery until the issues were “tackled in a forthright manner and resolved.”
Bair went on to describe the robo-signing process as an “infection” that might impact millions of foreclosures that have yet gone undiscovered[2]. This was a direct contradiction to what Acting Comptroller of the Currency, John Walsh, told officials last month when he insisted that problems were “limited in scope.” The Office of the Comptroller has already faced criticism for “going light” on lenders in a settlement designed to resolve uncertainty about the lending and foreclosure industries in the wake of last fall’s robo-signer fiasco. Bair also threatened that lenders might be forced by government-controlled GSEs Fannie Mae and Freddie Mac to buy back more defaulted loans as the extent of the damage done by faulty foreclosure practices becomes clearer.
Do you think that the robo-signer issue can ever truly be resolved? How?
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[1] http://www.dsnews.com/articles/bair-calls-robo-signing-probe-narrow-with-damages-years-in-making-2011-05-12
[2] http://blogs.wsj.com/developments/2011/05/12/fdics-bair-millions-of-foreclosures-could-be-infected/
As a Forensic Mortgage Loan Auditor and Securitization Examiner, I see the extent of this problem on a daily basis. As I have done my research on these files, I have only found 3 of 200 that did not have documents signed by robo-signers. This means that 197 of them, originated in most every state in the US, have been compromised and may now be uninforceable loans. The lenders, investors and servicers felt nothing wrong with regenerating these documents for their advantage. I don’t see this problem having a great outcome for the banks, but could put homeowners in a more affordable mortgage payment that helps them stay in their homes as long as they are able to compile the appropriate information.