FORECLOSURE PROCEEDINGS and evictions have become so sloppy that bankers routinely sign life-changing documents in bulk with barely a glance. The practice, dubbed robo-signing, is even more maddening given the major role that carelessness among creditors played in bringing about the worst economic downturn since the Great Depression. Just as indiscriminate lending produced millions of unsustainable mortgages, indiscriminate foreclosures could lead to evictions of the wrong people.
In Massachusetts, banks should heed Attorney General Martha Coakley’s request for a temporary freeze in foreclosure proceedings to review the adequacy of their own internal safeguards.
GMAC Mortgage,
Red-faced creditors are suspending foreclosures temporarily in 23 so-called judicial foreclosure states, where homeowners have the right to go to court to challenge the validity of foreclosure actions. In such states, creditors are now fearful they could lose their licenses by playing fast and loose with documentation under the gaze of a judge, according to Kathleen Engel, a mortgage law expert at Suffolk University Law School. But homeowners in Massachusetts and other non-judicial foreclosure states have fewer legal safeguards. So far, major creditors haven’t agreed to a temporary freeze on foreclosure proceedings here, despite Coakley’s request.
The banks in question could regain at least a semblance of credibility in Massachusetts by agreeing to the freeze until they can review their internal controls. Failing that, lawmakers in Massachusetts should rethink their opposition to bills that would require strict judicial review for foreclosures. If bank employees don’t reliably read or verify the basic aspects a foreclosure case, it makes no sense to allow them to seize homes at the stroke of a pen.
