Affidavits and Robo-Signing

The foreclosure process often involves the use of affidavits. Affidavits are documents where someone attests to a set of facts. The signer, as the affiant, attests to personal knowledge of those facts. Affidavits must usually be signed in front of a notary public. The affiant is swearing under penalty of perjury that all the information stated in the document is true.

Many state laws require foreclosure affidavits. The affidavits, in turn, require the mortgage servicer to confirm the validity of the:

• Mortgage documents
• Foreclosure proceedings

The affidavit must provide that the loan servicer or mortgage holder has a legal right to foreclose. It must state a valid cause, which usually means the homeowner has defaulted on their mortgage payments. States take the foreclosure process very seriously, especially since foreclosure can negatively affect a state's housing market.

Foreclosure Process and Affidavits

In a judicial foreclosure, mortgage servicers may ask the court for summary judgment. This allows the court to rule in their favor without the need for a trial. Summary judgment requires clear, undisputed factual evidence that a foreclosure is in order as a matter of law. To show the court that it should order foreclosure, the servicer or mortgage holder typically submits:

• Affidavits
• Other legal documents showing who owns the mortgage in question

Foreclosure affidavits include statements about the status of the mortgage account, such as:

• Payment history
• What is currently owed
• When it went into default
• How far behind the mortgagee is

The borrower may have no legal excuse or facts to dispute the mortgage holder's affidavit. Suppose the borrower does not contest the foreclosure with a valid foreclosure defense. Here, the foreclosure case will end, and the judge will grant summary judgment for the mortgage servicer. This allows the foreclosure sale to continue and the property to be sold.

In contrast to judicial foreclosure, nonjudicial foreclosure doesn't go through the court system. So, a court order isn't needed to proceed with the foreclosure process. A lender doesn't need to submit a foreclosure affidavit to a court in these situations. If you want to contest a nonjudicial foreclosure, you'll need to file a lawsuit. But keep in mind the disclaimer that:

• Approximately half of the states are judicial foreclosure states; and
• Such states require a court order to proceed with a foreclosure eviction

'Robo-Signing' and Foreclosure Affidavits

The term "robo-signing" has been coined to describe the rapid-fire signing of foreclosure affidavits. This involves automatic “robo-signers" which fail to adequately verify the truth of what the affidavits state. Mortgage servicers process very high volumes of mortgages. Some who handle foreclosure documents in quick succession have been accused of robo-signing. They allegedly do this to speed up the foreclosure process and limit their damages (loss mitigation).

Many mortgage servicers have faced robo-signing scandals. Those who have been investigated by several state attorney generals include:

• Bank of America
• JPMorgan Chase
• Wells Fargo
• GMAC Mortgage
• Ally Financial, Inc.

In fact, in 2011, Florida dismissed more than 104,000 foreclosure cases. The dismissal occurred because banks had issues verifying the accuracy of legal documents. The documents were not properly submitted under foreclosure law.

A homeowner has options if the mortgage servicer did not review underlying documentation. They can challenge the foreclosure affidavits signed by the servicer. The affidavits may be found inadequate to prove that foreclosure should happen. Some state foreclosure laws require that foreclosure affidavits include copies of supporting documentation. In these states, failure to include such documentation can stall the foreclosure process. It can also stop foreclosure altogether.

Challenging Foreclosure Affidavits

A homeowner facing foreclosure has options. They can challenge a foreclosure affidavit when a financial institution requests summary judgment. This can be done by:

• Citing inappropriate robo-signing
• Reporting any inaccurate information
• Challenging incorrect mortgage data and payment history contained in the affidavits

Though foreclosure affidavits are often perfectly accurate, sometimes they may contain bad information. They may state an inaccurate payment history or amount owed. For instance, in the case of securitization, mortgage debt is packaged and sold to investors. When mortgages have been sold many times, payment information is potentially lost in the shuffle.

Other times, fees may have been attached to an account improperly. You can find this information online. View the change of mortgage ownership timeline via the Mortgage Electronic Registration System (MERS). The mortgage industry created MERS to keep track of mortgage ownership transactions.

Still Stuck? Get Help From a Lawyer

Lenders typically rely on affidavits for winning foreclosure actions. You might have some success showing that a foreclosing party's affidavits are inadequate. But it may not resolve the underlying dispute about the property and whether it will be foreclosed.

In cases where affidavits are successfully challenged or found lacking by the court, a borrower may not have won a final victory. But the borrower may have staved off a final foreclosure decision. Such borrowers may then face the lender or servicer at trial to resolve whether the lender can foreclose on the real estate.

If you think your foreclosure may have happened improperly, a foreclosure attorney can help.