Legality of Thousands of Mortgages Thrown Into Question

Robo-signing has been around a lot longer than originally thought, and could jeopardize the legality over the deeds of tens of thousands of homes dating back more than a decade ago, the Associated Press (AP) reports.

County officials across the country are finding mortgage paperwork that were improperly notarized or signed without proper review, dating as far back as 1998, the AP has found in its analysis.

For example, in Guilford County, N.C., about 74 percent of 6,100 mortgage documents filed since 2006 were found to have questionable signatures.

"Because of these bad titles, property owners can't prove they own the properties they think they bought, and banks can't prove they had the right to sell them," Jeff Thigpen, the registrar of deeds in Guilford County, N.C., told the AP.

Since last fall, banks have faced investigations over “robo-signing” procedures, which consists of shortcuts of approving and reviewing mortgage paperwork and foreclosures. The “robo-signing” scandal has brought many foreclosures into question as home owners have challenged the validity of their mortgage documents.

Mortgage documents with robo-signed signatures could throw into question the ownership of the properties, says Katherine Porter, a professor at University of California Irvine School of Law .

Furthermore, if invalid documents are discovered in the chain of ownership, shoddy mortgage paperwork has the potential to delay the sale of a home or make it difficult for buyers to get a mortgage because title insurers won't write a policy for the property, says Justin Ailes, vice president of government affairs of the American Land Title Association.

Source: “Widespread Robo-signing of Mortgage Documents Found as far Back as 1998 Could Haunt Owners,” Associated Press (Sept. 1, 2011)