New Point of Foreclosure Contention: Default Notice
Friday, January 21, 2011
Lastyear's robo-signing scandals delayed tens ofthousands offoreclosures in the 23 states where the processis handled in court.Anew controversycould complicate foreclosures in the other 27 states.Like whatyou see? Click here to sign up for a National Mortgage News free trial and dailynewsletter to getthe latestfeature stories,news headlines,data,and in-depth analysis onthe issues impacting the mortgage industry.Atissue is the notice ofdefault,the firstletter thata mortgage lender or servicer sends to a homeowner who hasfallen behind on payments.The notice typicallystarts the formal foreclosure process in nonjudicial states such asCalifornia,Arizona and Nevada.Everynotice ofdefaulthas a signature on it.Butjustlike the infamouslyrubber-stamped affidavits in the robo-signing cases,defaultnotices,in atleastsome instances,have been signed byemployees who did notverifytheinformation in them,courtpapers show.In several lawsuits filed in nonjudicial states,borrower attorneys arearguing thatthis is grounds to stop a foreclosure."Whoever signs the NOD needs to have knowledge thatthere is in facta default,"said Christopher Peterson,anassociate dean and law professor atthe UniversityofUtah.The suits also argue thatthe defaultnotices are invalid because the employees who signed them worked forcompanies thatdid nothave standing to foreclose.In a lawsuitagainstWells Fargo & Co.in Nevada,an employee for a title companywho signed defaultnoticesadmitted in a deposition this month thathe did notreview anydocuments or know who had the rightto foreclose."Theyare starting foreclosures on behalfofcompanies with no authorityto foreclose," said RobertHager,anattorneywith the Reno,Nev.,law firm Hager & Hearne,representing the borrower in the case."The policyofthesecompanies is to justhave a signer execute a notice ofdefaultstarting foreclosure withoutanydocumentation todetermine whether theyare starting an illegal foreclosure."The Nevada nonjudicial foreclosure statute requires thatthe companysigning a notice ofdefaulthave the authorityto foreclose,Hager said.In a deposition on Jan.4,StanleySilva,a title officer atTicor Title ofNevada Inc.,said he "technicallysigned"defaultnotices for clients,which were often acting as agents ofother parties,which in turn worked for others."The person atthe bottom ofthe chain,byexecuting the document,has taken an action on behalfofall ofthemthrough their various agencyagreements," Silva said.In one case,for example,he said he had signed "on behalfofTicor Title ofNevada,who is agentfor LPS Title,who is agentfor National DefaultServicing.""Who is agentfor FidelityNational?"Hager asked."Apparently,yes," Silva replied."Which is a servicer for Wilshire?"
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