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Robo-Signing Concerns Stop Foreclosures in Maryland From Two Major Lenders

January 24, 2011

Our Moreno Valley foreclosure defense lawyers have watched the news for yet more reports of fallout from "robo-signing." On Jan. 18, Maryland became at least the fifth state with large-scale delays in foreclosures caused by concerns about defective paperwork. As the Baltimore Sun reported that day, GMAC Mortgage, the home-loans unit of Ally Bank, asked to dismiss about 250 pending foreclosure cases supported by paperwork that might not meet legal standards. The decision was followed the next day by a similar decision by Wells Fargo's mortgage unit, which said it would dismiss an unspecified number of Maryland cases. Both banks expect to re-file after reviewing their paperwork and records to ensure that "all home preservation options were exhausted."

The decisions came after both banks were sued by a public interest law firm that specializes in housing, Civil Justice. Civil Justice brought class-action lawsuits asking the court to dismiss foreclosures whose paperwork was signed by specific bank employees who had admitted to robo-signing. The claims were likely bolstered by an emergency update to Maryland court rules made in October in response to robo-signing. That update made it clear that courts can throw out foreclosure cases tainted by robo-signing and audit shaky paperwork; a foreclosure defense attorney said he'd noticed an increase in judges asking questions about paperwork under the new rules. The banks' decisions to drop and refile the cases will likely benefit homeowners, the article said, because of new rules requiring banks to show that they considered foreclosure alternatives and allowing homeowners to use court-supervised mediation.

This decision is a victory for Maryland homeowners, some of whom may be incorrectly plunged into foreclosure by shoddy paperwork practices. It's also more evidence that the fallout from robo-signing is going to have measurable and sometimes positive effects on homeowners in foreclosure. Already, as this article notes, banks have slowed the rate at which they take actual physical control of foreclosed homes across the nation. That effect is expected to last several more months. More importantly for our Norwalk foreclosure defense attorneys, robo-signing is giving judges a good reason to scrutinize paperwork provided by lenders, and lenders a reason to make sure their noses are clean. At the least, this will give homeowners more time to deal with foreclosure; at best, it could stop the careless mistakes that have sent some into foreclosure for no good reason.

Howard Law PC defends the rights of homeowners who are caught in a foreclosure nightmare by their lenders' mistakes or inflexibility. Our clients are Californians of every background who are in default or foreclosure, or expect to be there soon, but believe they can work it out if the lender is willing to consider a loan modification. In the experience of our Yorba Linda foreclosure defense lawyers, mortgage servicers and lenders aren't interested in doing this, and have bureaucracies that actively draw out the process, prolonging personal and financial strain on the borrower. We help clients get around this unhelpful process, negotiating aggressively for an interest rate reduction, restructuring or other change that could keep our clients in their homes for the long term.

If you're tired of fighting with your mortgage servicer as the weeks pass by with no help, you should call Howard Law instead. To tell us your story or set up a free, confidential case evaluation, call us toll-free at 1-800-872-5925 or send us a message through our website.