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Tens of thousands of home foreclosures have been thrown into question. The reason: Sloppy paperwork at a company owned by Ally Financial. GMAC Mortgage has now halted evictions in 23 states, while it checks - and in some cases, corrects - court documents.
As NPR's Tamara Keith reports, this problem goes well beyond one company.
TAMARA KEITH: This issue came up in states where foreclosures go through a judicial process. As part of that process, lenders have to file an affidavit that confirms basic facts like how much the homeowner owes and that the foreclosure action is legally justified.
But in the case of GMAC Mortgage, the person signing the documents admitted that he didn't actually verify that what they said was true.
Chris Immel is an attorney at Ice Legal, a foreclosure defense firm in West Palm Beach, Florida. He conducted a deposition with a GMAC employee named Jeffrey Stephan. Immel says his job was to sign foreclosure documents.
Mr. CHRISTOPHER IMMEL (Attorney, Ice Legal): We took his deposition. And in taking it, he pretty much admitted to signing, you know, he said approximately 10,000 documents a month.
KEITH: Attorneys like Immel have taken to calling these employees at loan servicing firms robo-signers.
Mr. IMMEL: Basically when you're signing 10,000 documents a month that obviously doesn't give you too much time to review a complaint or a case file. Somebody else puts the numbers in. He just is signing them, relying on the accuracy of somebody else having put those numbers in.
KEITH: GMAC's parent company, Ally Financial, which underwrites NPR programming, says those numbers were accurate. In an email, a company spokeswoman says an internal review has revealed no evidence of any factual misstatements or inaccuracies.
Ally says its process for dealing with foreclosure documents has been fixed. Mr. Stephan was not available for comment.
This issue extends beyond Ally and GMAC. The attorney general in Florida is investigating four law firms that help loan servicers, like GMAC, with foreclosure cases.
Attorney Chris Immel says his firm has conducted depositions with employees at other loan servicing companies, indicating they also signed legal documents without careful review.
Mr. IMMEL: Essentially it just shows that people had their properties taken on evidence that was unreliable.
KEITH: Patrick Madigan is an assistant attorney general in Iowa, who specializes in mortgage issues.
Mr. PATRICK MADIGAN (Assistant Attorney General, Iowa): If you just think about the scope and scale of the crisis - just the number, the record number of foreclosures that are going through the system - it's not entirely surprising to hear a story like this.
KEITH: So what does this mean for all those homeowners still facing foreclosure? Guy Cecala, the publisher of Inside Mortgage Finance, says they could get a short reprieve.
Mr. GUY CECALA (Publisher, Inside Mortgage Finance): But it's not like they're going to hand you the keys and say forget making any payments going forward forever, you own the home.
KEITH: He says in most cases these homeowners have been in default for months. The servicer may have made a serious mistake, but the reason for the foreclosure still remains.
Mr. CECALA: They may not have followed the proper procedures, but that doesn't negate the fact they're still in default and haven't made mortgage payments. And unless they can make mortgage payments there's no way they're going to be able to stay in the home.
KEITH: Ally says it plans to resolve all of the foreclosure cases involved by the end of this year.
Tamara Keith, NPR News, Washington.
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