(Phoenix, Ariz. -- Oct. 8, 2010) Attorney General Terry Goddard announced today he is sending letters to more than 60 mortgage loan servicing companies in Arizona, warning them about possible violations of state law in document signature practices involved in home foreclosures and demanding a thorough review of those procedures to make sure they comply with the law.
Those practices involve the use of "robo-signers" -- employees who may sign hundreds of foreclosure documents a day without reviewing their contents. Some of the nation's largest loan servicers have admitted publicly in recent days that their employees have signed thousands of documents without knowing what's in them. They further admitted that employees have signed affidavits that falsely claim personal knowledge of the facts and have sometime filed inaccurate documentation.
In the letters to servicers, Goddard said such practices likely constitute a violation of the Arizona Consumer Fraud Act. He demands that the companies review the documentation supporting foreclosures and immediately rectify all foreclosures or trustee's sales found to have been not legally justified.
"Several servicing companies have admitted that rubberstamping foreclosure documents was common in other states. If it took place in Arizona, I want it stopped," Goddard said.
"I'm asking each company to describe its signing practices in detail. If any foreclosures were processed with 'robo-signers' in violation of the law, they will have to be made right legally. I'm very concerned that some of the same mortgage companies that deceptively put people in unfair loans now may be fraudulently throwing them out of their homes."
Several of the nation's largest servicers recently suspended foreclosures in the 23 states where all foreclosures must be conducted through the court. While Arizona is not one of those states because it permits foreclosures outside of judicial process, Goddard said document signing abuses would be no less serious violations if they occurred here.
Bank of America, the nation's largest bank by assets, today announced it is halting all foreclosure sales across the U.S., effective Saturday, in response to the "robo-signer" disclosures. The bank said it would keep its moratorium in place until it completes an assessment of its document signing practices in every state.
In his letters, Goddard also reminded the companies of a new state law that makes it illegal for some trustee's sales after July 29 to be conducted without first attempting to contact the borrower to explore options to avoid foreclosure.
A copy of the letter to servicers is attached. For more information, contact Steve Wilson at (602) 542-8351.