DocX helped banks create documents ? such as mortgage assignments, which transfer ownership of a home loan from one entity to another ? in cases where the documents were missing from the original loan file or never existed in the first place. Those documents then were used in foreclosure proceedings all across the country.
In Horry County, DocX documents have been used in at least 46 foreclosures since 2008.
There are nearly 100 DocX mortgage assignments filed at Horry County?s register of deeds office for homes with loans totaling more than $17 million.
Green?s purported signature is on many of those documents.
And many of those documents are suspected of being fraudulent, according to government regulators.
Questionable signatures
The Federal Reserve Board and a trio of banking oversight groups issued a consent order in April against DocX and its parent company, Lender Processing Services Inc. of Jacksonville, Fla.
Although no fine was issued and the regulators said more study is needed to determine what wrongdoing ? if any ? occurred, the order has sparked investigations of DocX, which shut down last year, in at least four states and more attorneys general are expected to join the probe.
The regulators? action took place after a ?60 Minutes? television news broadcast on April 3 that showed DocX hired high school students and others for $10 an hour to sit in a sweatshop-like setting and sign thousands of mortgage documents every day, without checking to see if the documents were accurate.
DocX workers signed the documents as if they were vice presidents of national banks. Green, for example, claimed to be the vice president of 20 banks at the same time.
And when the real Linda Green wasn?t signing the mortgage documents, other DocX workers were signing them in her name, according to the report. DocX documents, including those filed in Horry County, show numerous variations of Green?s purported signature.
DocX workers told ?60 Minutes? that Linda Green?s name was chosen as the one they all would sign because it is short and easy to spell.
DocX also had public notaries sign the documents, attesting that Linda Green was the vice president of various banks and that they saw her sign the paperwork. Jasmin Bennett, the notary who signed Wise?s document, did not return a telephone call seeking comment.
Green, however, was not the vice president of 20 banks and the documents she and other DocX workers signed as if they were bank executives are coming under fire in legal proceedings ? including Wise?s foreclosure.
Linda Green could not be reached for comment. A spokeswoman for Lender Processing Services did not respond to a request for comments.
?From what I can tell, everything DocX did was fraudulent,? Wise, the owner of Exit Elite Realty in Myrtle Beach, told The Sun News last week. ?They were just robo-signing these documents, in my opinion, and Linda Green was the one who did that.?
Wise has hired a Myrtle Beach company called New South Financial to help him fight the foreclosure. He says the allegedly fraudulent mortgage assignment Green signed ? in this case, pretending to be the vice president of American Home Mortgage Servicing Inc., the successor to Option One Mortgage ? means the lender that is trying to take his home doesn?t really have clear title or rights to the property.
?At this point, with what we?ve discovered so far, I want my loan negated,? Wise said. ?That?s what I?m going for.?
Game of cat and mouse
The allegations aren?t limited to DocX.
?If you look through your local land documents, they?re full of trash,? said Lynn Szymoniak, a Palm Beach Gardens, Fla., lawyer who made it her mission to raise courts? awareness of fraudulent mortgage documents after her own home went into foreclosure. ?It is incredibly widespread.?
Bob and Christine Dorrie moved to Myrtle Beach from the Bronx in New York in 1998. Like many people during the economic boom, the Dorries used their credit cards to finance a lifestyle beyond their means. So, in September 2007, they decided to refinance their home in the Island Green East neighborhood to pay off some of their bills.
?When we went to closing, the woman handling it said, ?Well, we couldn?t get as much money as we thought?,? Bob Dorrie said, adding that none of the credit card bills wound up getting paid in full. ?We ended up with all the charge cards still open with money still on them and a new home loan at a much higher price.?
The Dorries? mortgage payment, which had been $987 a month, soared to $1,340 a month after the refinance.
As the economy grew worse, the Dorries quickly fell behind on their house payment.
Wells Fargo Bank, the new owner of the Dorries? loan, filed a foreclosure lawsuit against the couple on Sept. 2, 2009. Bob Dorrie?s emergency bankruptcy filing three days before the house was to be sold at auction has put everything in limbo.
The Dorries now are questioning how Wells Fargo came to own their loan.
Ace Funding ? the company that gave the Dorries their loan in 2007 ? filed for bankruptcy protection and went out of business the following year, never officially assigning the Dorries? loan over to Wells Fargo.
Wells Fargo didn?t file the assignment on behalf of the defunct Ace Funding until more than three weeks after the foreclosure lawsuit was filed. A lawyer representing Wells Fargo in the foreclosure lawsuit signed the document for Ace Funding, even though he ?really has no authority to assign this mortgage,? according to Terry Walden, an audit originator and attorney liaison for New South Financial.
When Dorrie pushed Wells Fargo for more information about the ownership of his mortgage, the bank told him in November that Fannie Mae owned the mortgage and that Wells Fargo was only the loan servicer.
Then, in April, Wells Fargo told Dorrie that the real owner of his mortgage is Freddie Mac.
?Given this information, only Freddie Mac has the authority to enforce this note and foreclose on this property,? Walden said.
Wells Fargo spokesman Jim Hines disagrees, saying the Dorries? loan documents were handled appropriately and that the bank?s contract as a loan servicer gives it ?the authority to take action on the loan to protect the investor?s interests, including foreclosure.?
Hines said Wells Fargo is working with the Dorries and hopes to ?reach a solution that would help them keep their home.?
Linda Green?s signature appears on DocX paperwork used with thousands of Wells Fargo mortgages ? although not in the Dorries? case ? since the real estate boom.
Even so, Hines said Wells Fargo has reviewed mortgage documentation for all of its loans and ?has not found any foreclosure that should not have taken place.?
Wells Fargo sees foreclosure as a last resort, Hines said, and has worked with 673,000 borrowers to modify their loans since January 2009.
Bob Dorrie said Wells Fargo has repeatedly thrown up road blocks while he has tried to modify his loan. He hopes the perceived chain of title issues will give him some additional leverage in court proceedings and force his lender to modify his loan on terms he and his wife can live with.
?This is supposed to help force the bank?s hand, instead of them playing this game of cat and mouse with me,? Bob Dorrie said. ?I?m still in the home, and I?d like to keep it.?
Who is at fault?
Ballery Skipper, the director of Horry County?s Register of Deeds office, said her staff is not responsible for investigating whether or not a document is legitimate. As long as fraud is not suspected, Skipper said, she is legally required to file the documents.
In the few cases where Skipper or her staff suspects fraud, the case is referred to the state attorney general?s office. Skipper said she has not referred any of the DocX filings to law enforcement.
Register of Deeds offices in other states, however, are starting to do their own investigations. A review of filings in Guilford County, N.C., for example, found 1,920 DocX loan documents for property worth $255 million and 15 variations of Linda Green?s signature.
Some mortgage executives say the documentation problems are overblown, and that homeowners are looking for any reason to stop a foreclosure.
?The homeowners have defaulted on their loans, and a flaw in the documentation does not mean the foreclosure was a wrongful foreclosure,? said Janis Smith, vice president of Mortgage Electronic Registration Systems, or MERS, the nation?s largest mortgage loan registration service.
?Foreclosure is a very emotional situation, and people will try all angles in an attempt to stop the process,? Smith said. ?At the end of the day, though, you still have a situation where the borrower didn?t make their payments.?
Walden, however, says that kind of response is disingenuous. While the courts are set up to determine whether a homeowner has defaulted on a loan, he said, they are also responsible for ensuring the banks? paperwork is legitimate and that due process is followed.
?The banks just made up the paperwork they needed to get the deal done,? Walden said. ?We want to hold the banks accountable for that.?
Where it all began
To better understand how this mortgage mess occurred, one has to look back to the home-buying frenzy that took place between 2005 and 2007.
During the real estate boom, some of the nation?s largest banks bought home loans from all over the country and packaged them together in mortgage-backed securities that were sold to investors ? including many 401(k) programs and pension funds.
Each security that was issued included thousands of mortgage loans worth a combined $1 billion to $1.5 billion ? and the Wall Street banks sold hundreds of those securities to investors who believed the rise in home values would never end.
As the hunger for mortgage-backed investments grew, banks had to find more and more people to take on new loans that could be packaged into new securities. Before long, home loans were being given to nearly everyone that applied ? regardless of income or credit score.
Many banks didn?t even require documentation of a person?s income or employment before giving them a loan. And some bankers looked the other way when an obviously fraudulent application crossed their desks, recent investigations show.
?If you had a heartbeat, you could get a loan,? said Walden, a former mortgage broker.
When the millions of people who never should have been given credit in the first place started to default on their home loans, the mortgage-backed securities house of cards imploded and the real estate bust began.
Those securities also are at the root of today?s mortgage documentation debacle.
The trust companies that issued those securities ? usually a large bank such as Bank of New York or Deutsche Bank ? were required by law to have a copy of the mortgage note and every mortgage assignment showing a clear chain of title for each of the thousands of loans included in each investment offering.
The trust companies were required to obtain those documents no later than 90 days after the security was issued.
There were so many securities being issued so quickly, however, that the trust companies were not able ? or didn?t bother ? to collect all the required documents.
That didn?t cause problems as long as the mortgages were being paid. But when a homeowner stopped paying and a bank decided to foreclose, the needed documentation wasn?t there.
That is why many banks turned to ?document mills,? which charged a small fee to create the documentation banks needed to proceed with foreclosure. It is estimated DocX alone created at least 2 million mortgage documents nationwide, many of them allegedly forged and fraudulent, over a two-year period.
?Instead of doing things the right way, the banks chose to go into court and lie,? Szymoniak said.
Foreclosure lawsuit
Anthony Wise refinanced his Myrtle Beach home in February 2006 and he thinks his lender started to recreate his mortgage paperwork after he missed a payment in late 2008.
For example, a mortgage assignment transferring the loan from Option One to Deutsche Bank National Trust ? the company that oversaw the mortgage-backed security that purportedly includes Wise?s loan ? was recorded Jan. 23, 2009, in Horry County. That document was prepared by DocX and includes Green?s signature.
?They were trying to get all of their paperwork in a row just in case,? Wise said.
A Deutsche Bank spokesman did not respond to a request for comments.
Deutsche Bank filed a foreclosure lawsuit against Wise in April 2010, and that case is still pending.
In addition to allegations that the DocX mortgage assignment is fraudulent, Wise says Deutsche Bank missed the deadline for documenting his loan and has no right to foreclose on his home.
Wise?s mortgage was placed into a security called Soundview Home Loan Trust 2006-OPT2, which had a closing date of April 7, 2006. That means all of the documents for all of the loans in that security had to be obtained by Deutsche Bank within 90 days of that closing or, by law, they could not be included.
Wise?s mortgage assignments ? including the one giving the loan to Deutsche Bank ? weren?t filed until more than two years after the Soundview security closed, according to county property records.
Help for homeowners
There are dozens of instances in Horry County where DocX hastily created mortgage assignments to help banks foreclose on residents? homes. In most cases, those documents were not created until after a foreclosure lawsuit had been filed. And in some cases, DocX back-dated the documents to make it appear as if they took effect just days before the foreclosure filing.
Most of the DocX paperwork filed in Horry County bears the signature of Linda Green.
Richard Lovelace, a Conway lawyer who specializes in real estate and banking law, said the banks who used DocX ? or similar document mills ? have put themselves at risk if homeowners can prove the paperwork is fraudulent.
That is true even if a home has already been lost to foreclosure.
?Any flaw that is discovered post-hearing, if it?s brought to the court?s attention in a timely manner, the judge will set aside the judgment and reopen the hearing,? said Lovelace, who is not involved in any of the foreclosure cases where DocX documents were used.
If the court proceedings ? and the paperwork those proceedings were based on ? are proven to be defective, Lovelace said, the bank can?t take the property.
?The court would declare the loan void,? he said. ?The judgment would have to be set aside and the homeowner would be restored as the owner of the property. That?s the only remedy in such a case.?
Szymoniak, the Florida lawyer, envisions another solution.
?A fund should be set up, kind of like the BP oil spill fund, that will reimburse people who?ve lost their homes because of these fraudulent loan documents,? she said.
The banks who contributed to the problem would contribute money to the fund, and an independent third party would determine which homeowners qualify for reimbursement.
That is an idea that is being discussed by federal regulators and the attorneys general in all 50 states, who have initiated a widespread investigation into shoddy mortgage documentation by banks and document mills.
Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., has estimated that such a fund would need billions of dollars.
Mark Plowden, a spokesman for S.C. Attorney General Alan Wilson, said his office is active in the national investigation but is not targeting any specific company, such as DocX.
He said the multi-state group is ?reviewing the larger issue, which includes these entities and their actions.?
Owners fight back
Some homeowners aren?t waiting for a federal investigation to be completed ? they are fighting back by taking the banks to court. And in some recent cases, the homeowners are winning.
In Russell County, Ala., for example, Phyllis Horace obtained a summary judgment in March against LaSalle Bank National Association after alleging the bank did not have the proper paperwork needed to foreclose on her home.
Judge Albert Johnson, in ordering LaSalle to stop foreclosure proceedings against Horace, said he was ?surprised to the point of astonishment? that the bank did not comply with its own regulations regarding documentation of loans.
The Dorries say they also plan to file a counterclaim in their foreclosure lawsuit based on information they have discovered in recent months.
New South Financial is helping Myrtle Beach area residents review mortgage documents to determine whether flaws or fraud exist that could help force banks into negotiating new loan terms.
The company also has agreements with area lawyers who will file complaints on behalf of New South clients. The service isn?t cheap ? an audit of documents costs $3,000 and lawyer fees total $500 a month ? but Walden said it is less expensive than hiring a law firm to defend a foreclosure action.
Experts say such services can be useful, but homeowners can do much of the needed investigation on their own for free by visiting the local register of deeds office or searching securities filings on the Internet.
Homeowners also can take advantage of an S.C. Supreme Court order that halted all foreclosures as of May 9 until after banks and borrowers have a chance to try and negotiate a modified loan. That order was not directly related to mortgage documentation issues, and if negotiations fail the banks can proceed with foreclosure.
Szymoniak, whose foreclosure is based in part on DocX paperwork signed by Linda Green, said she understands the resentment some people feel against those who haven?t been able to pay their mortgages yet are fighting foreclosure based on what some might consider a technicality.
In many cases, though, that?s the only way to get banks to work with borrowers, she said.
?We have a wholesale deterioration of neighborhoods across the country because of these foreclosures,? she said. ?And that?s doing nothing but making the housing crisis even worse.?
Article source: http://www.thesunnews.com/2011/06/19/2228372/mortgage-papers-raise-fraud-claims.html
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