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“Effort on Home Loans Stalls”
Last year, financial firms became embarrassed by revelations of “robo-signing” by employees who signed off on hundreds of documents they hadn’t even read, giving banks the right to foreclosure. Judges began to raise questions about how banks documented their ownership of loans and whether financial firms fabricated paperwork. The “robo-signing” controversy unleashed a legal, regulatory, and public relations nightmare that still haunts mortgage companies such as, Bank of America and Wells Fargo.
Regulators said they have found widespread weaknesses in mortgage-servicing operations and think “robo-signing” is still occurring. This has caused mortgage-servicing companies to move cautiously. Delays in the foreclosure process means it is taking longer for foreclosed homes to be sold to new buyers and cleared out of the housing market. Across the U.S., the average loan that completed foreclosure in July had no payments for 599 days, up 25% from 478 days in August 2010.
Mortgage companies say they have been working hard to improve the handling of shaky loans. “Fixing all the problems found by the U.S. government is a multiyear process,” says a spokesman for the Office of Comptroller of the Currency (Timiraos, 2011).
There are several factors contributing to “robo-signing.” First and foremost, the big issue is that people are swearing to a document’s accuracy without even reading it. It also looks like under qualified employees are signing off on documents without confirming any details. These documents then become legal, even though the information is incorrect. This can create problems with the status of the loan. As a consumer, it terrifies me to think an error like this could affect me. After reading the article, I asked myself, what is actually causing “robo-signing?” Are employers hiring under qualified employees or are current employees simply on overload?
I mainly chose this article because I worked for a...
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