Reference no: EM133353837
Assignment:
The law firm in the video represented banks and other clients who held mortgages. When the foreclosure crisis hit in 2009, with 2.8 million mortgages foreclosed nationally, the firm handled more than 70,000 foreclosures, or about 20 percent of foreclosures in the State of Florida, bringing in $260 million in revenue. David Stern was one of the attorneys investigated for "Robo-signing" the required affidavits in order for the courts to proceed to foreclose on the property.
The lender proves the facts in a judicial foreclosure by submitting documents and a written statement signed under oath in the form of an affidavit, by a person who is usually a bank employee, who has reviewed the documents, and who is supposed to have some personal basis for believing the facts to be true. The idea is to prevent foreclosures on homes where the foreclosing bank cannot prove that it actually owns the mortgage, or where the homeowner is not actually in default to the degree asserted in the foreclosure papers. Some big banks and law firms like Stern's were signing thousands of these affidavits a month without the personal knowledge required that the homeowner was in default. They would spend thirty seconds on each one of the thousands of affidavits signed and had no idea whether the facts in them were true, hence the term "Robo-signing."
A former paralegal to the law firm testified in a deposition that employees were told to forge signatures, change dates, and use the wrong social security numbers to finish paperwork. On the video, she is quoted as saying, "mortgages would get placed in different files; mortgages would get thrown out."
1. Why were the mortgage files handled this way?
a. To prevent foreclosures on homes where the foreclosing bank cannot prove that it actually owns the mortgage.
b. To provide more ethical services to the firm's customers.
c. To foreclose on thousands of properties within the deadlines for mortgage foreclosures.
d. To ensure adequate review of each mortgage client.
2. What was the likely impact of the law firm's treatment of the mortgages?
a. Efficiency within the firm was drastically decreased.
b. Efficiency within the firm was drastically increased.
c. There was little to no impact based on the law firm's treatment of the mortgages. Mortgages that were in default were appropriately processed.
d. When the mortgages were placed in the wrong files or thrown out, there was no way to prove that there was a mortgage on a piece of property, who owned the mortgage, or who, if anyone, was in default. People may have lost their homes without being in default if judges were not looking closely at the paperwork.
3. Discusses the need to safeguard client files. In a perfect world, how should the mortgage default files, including the mortgages and affidavits, been handled?
a. A file should have been set up for each mortgage that was in default and all of the necessary paperwork to prove a default should have accompanied it. That way the signers could review all of the documentation and truthfully sign an affidavit, or inform the bank or mortgage company that a foreclosure was not warranted. Nothing should have been thrown out.
b. The mortgage default files in this case were handled appropriately.
c. A file should have been set up for each mortgage that was in default and all of the necessary paperwork to prove a default should have accompanied it. That way the signers could review all of the documentation and truthfully sign an affidavit, or inform the bank or mortgage company that a foreclosure was not warranted. After review, all documents except the affidavit could have been thrown out.
d. A file should have been set up for each mortgage that was in default and all of the necessary paperwork to prove a default should have accompanied it. As long as the file was complete, there would be no need for each signer to review all of the information. Also, nothing should have been thrown out.
Google "Robo-signing" and indicate how the Robo-Signing scandal ended.
What would you do if you found yourself working for a law firm like the one in the video? Would you break the law to keep your job, as was alleged was the case in video clip?