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The foreclosure crisis seems to be shifting into a new gear. The buzz now is all about documentation problems with foreclosure proceedings. Wells Fargo is admitting foreclosure filing problems of its own and suspending foreclosures in 23 states. In general, foreclosure is the right of a mortgage holder or other third-party lien holder to take ownership of the property and/or the right to sell the property.
Wells Fargo joins a growing list of banks facing legal problems over whether the bank followed the correct legal protocol when it processes foreclosures. Other banks that have already suspended foreclosures include GMAC Mortgage, JPMorgan Chase, Ally Financial, PNC Bank, Goldman Sachs' Litton Loan Servicing and Bank of America.
Wells Fargo used the strategy of deny, deny, deny...admit. The bank had claimed for weeks that it was not impacted by the problems that rocked other banks and forced them to freeze foreclosures. Just last week, Wells Fargo CEO John Stumpf said "[we are] confident that our practices, procedures and documentation for both foreclosures and mortgage securitizations are sound and accurate." Now, surprise, surprise, the company says, well, yeah, we might have messed up a bit...kinda sorta:
"The issues the company has identified do not relate in any way to the quality of the customer and loan data; nor does the company believe that any of these instances led to foreclosures which should not have otherwise occurred," said Wells Fargo in a statement, The Washington Post reports.
However, Wells Fargo employee Xee Moua, in a deposition, admitted to "robo-signing" the practice of signing hundreds of thousands of documents without properly reviewing them. It's an interesting development in a case that looks to drag on for years. Check back, as we'll keep you posted.