Mortgages

Consumer Advocates Sue for Big Banks’ Robo-Signing Records

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The robosigning scandal got even more interesting this week when lawyers for a consumer advocates group asked a Maryland court to grant them special access to all the foreclosure documents filed in the state by GMAC and Wells Fargo, according to a story in the Baltimore Sun.

The lawsuit takes advantage of a new rule approved by Maryland’s highest court authorizing judges to hire “special masters” to review cases for problematic paperwork, according to the Sun. The lawyers argue that a special investigation is needed to make sure that banks comply with foreclosure laws.

“It’s another example of an attack on the integrity of the courts,” Peter A. Holland, co-counsel on the case, told the Sun. “These affidavits are integral to the honest operating of the foreclosure process.”

Attorneys general and regulators in all 50 states are pursuing their own joint investigation into robo-signing. But the Maryland suit raises possibility that a group of private attorneys working for low-income homeowners could obtain the same discovery rights to internal documents at GMAC and Wells Fargo, two of the country’s biggest loan servicing companies.

That could lead to even juicier revelations of impropriety, and more lawsuits on behalf of people who may have been forced from their homes illegally.

It also could lead to a giant legal mess, Civil Justice attorney Phillip Robinson told the Sun. Thousands of homes with improperly signed foreclosure documents may already have been auctioned off in Maryland.

Ten former homeowners have already called Robinson to find out if they have the right to sue.

“There’s going to be years and years and years of litigation,” Robinson told the Sun.

Photo by quapan via Flickr

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