Two months after the National Mortgage Settlement was announced, mortgage lenders and financial companies are continuing to be plagued with legal challenges stemming from “robo-signing” abuses. The latest case could have national industry implications because a state supreme court intends to issue his own ruling on a foreclosure dispute, even though the bank already settled with the homeowner.
Legal observers say the ruling — if it goes against the bank — could influence how courts in other states decide similar claims.
The case involves a Palm Beach, Florida, home owned by a local construction worker. The lender had initiated foreclosure proceedings, but the initial foreclosure paperwork had been prepared by a now-defunct law firm that played in key role in the “robo-signing” crisis. Investigators with the Florida Attorney General’s office alleged that employees of the law firm routinely forged signatures, altered documents, shared Notary seals and otherwise improperly notarized documents.
After the homeowner’s attorney discovered that the date on a key document pre-dated the Notary’s commission — evidence that the document had been backdated — the bank withdrew the case and attempted to re-file it with revised paperwork.
The homeowner argued that the bank should not be able to re-file a case after initially submitting fraudulent paperwork. The case worked its way to the Florida Supreme Court, which announced its intention to consider the facts even though the bank reached a confidential settlement with the homeowner, who now owns the house free and clear, according to media reports.
Michael Lewis is Managing Editor at the National Notary Association.