Financial institutions and the third-party contractors that service loans are still liable for the improper notarization and document signing practices exposed by the “robo-signing” crisis, even after the $25 billion national mortgage settlement with federal agencies and 49 state attorneys general.
The most recent example is a lawsuit filed against loan servicing giant Nationwide Title Clearing, Inc., by Illinois Attorney General Lisa Madigan. The lawsuit accuses the Florida-based company of running a “document production factory” in which its employees improperly affixed the seals and signatures of Notary co-workers to foreclosure-related documents, signed and filed documents containing false information, and routinely signed documents on behalf of others.
Apart from the financial terms, the nationwide “robo”settlement creates a mandate for the banks to correct the widespread practice of routinely signing foreclosure-related documents outside the presence of a Notary Public. While the agreement resolves investigations against the banks that have accepted it, those institutions still could face stiff penalties of up to $5 million per incident for violating its terms.
The agreement also permits criminal cases — such as those filed in Nevada and Missouri — as well as civil actions brought by consumers to proceed. Many companies already are moving to improve the training and policies governing how their Notary employees and supervisors do their jobs.
Michael Lewis is Managing Editor at the National Notary Association.