Deficient documentation over mortgage ownership is causing a mess for financial institutions in state courts and, as a result, borrowers in a number of states have won recent court rulings over foreclosure actions.
At issue is shoddy paperwork and practices that have muddied the water over which financial institution actually owns specific mortgages. In a recent foreclosure case in Alabama, the Court of Civil Appeals ruled in favor of a borrower when the lender could not provide documentation of ownership of the loan.
And in Nevada — a state that has been a hotbed of litigation in the foreclosure crisis — several cases have been found in favor of borrowers because financial institutions could not prove they actually owned the mortgages.
This raft of litigation has financial institutions working to ensure their Notary employees and supervisors adhere to proper notarial practices throughout the foreclosure process.
“More and more financial institutions are recognizing the importance of sound notarization in mortgage and real estate transactions,” said Chris Sturdivant, Business Development Executive at the National Notary Association. “By verifying the identity of signers, screening for willingness and awareness, and following all proper notarial procedures, companies will reduce their exposure to costly and disruptive lawsuits.”