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OIG Audit: One BofA Manager Signs 67,908 Documents in 2 Year Period

by devteam March 16th, 2012 | Share

The Department of Housing and UrbanrnDevelopment released five reports from its Office of Inspector General on Tuesdayrnbased on reviews of the foreclosure and claims processes of the five largestrnFederal Housing Administration (FHA) mortgage servicers.  OIG conducted the audit of  Bank of America, Wells Fargo Bank,rnCitiMortgage, JPMorgan Chase, and Ally Financial, Inc, after allegations were madernin the fall of 2010 that national mortgage servicers were engaged in questionablernforeclosure practices involving foreclosure mills and robo-signing of swornrndocuments in thousands of foreclosures.</p

For each of the five servicers OIGrnconducted a review of a wide variety of documents such as personnel files,rnservicing and foreclosure processes, Congressional testimony and courtrndocuments regarding those processes, FHA claims documents, and foreclosurernaffidavits.  They also interviewedrnservicer management and staff and those of vendors involved in foreclosures andrnclaim processes.</p

The five separate reports generallyrnreached the same conclusions.  First, thernservicers did not establish effective control over their foreclosurernprocesses.  The affiants (a person whornsigns an affidavit and attests to its truthfulness before a notary public) routinelyrncertified that they had personal knowledge of the documents they signed withoutrnactually referring to source documents or verifying the accuracy of the foreclosurerninformation.  Affiants admitted to havingrnsigned large numbers of documents each day.  One Ally employee, for example, claimed tornhave signed up to 400 documents a day and 10,000 per month.  The affiants had neither the work historiesrnnor training to hold the titles they held. rnNotaries did not always witness the actually signing of documents andrnroutinely notarized hundreds of documents each day.</p

The servicers also did not follow HUDrnrequirements for properties foreclosed on in judicial states and may havernconveyed improper titles to HUD because it did not establish controlrnenvironments which followed the requirements.</p

It was discovered that Citi did not havernwritten processes in place for signing documents prior to November 2009 nor didrnit track documents during the period of the OIG review.  OIG said its investigation of Citi wasrnhampered by this lack of records and it had to rely on personnel interviews forrnmuch of its information.</p

OIG found that in many instancesrnsupervisors at each servicer were aware of the violations of procedures whilernthey were happening.  The Chase reportrnfor example states “During Interviews, Chase’s operations supervisorsrnacknowledged that they routinely signed and certified that they had personalrnknowledge of the contents of documents … without reviewing the sourcerndocuments referred to in the affidavits.” rnChase also outsourced its document execution process to First American.  </p

A Bank of America employee said herrndirect supervisor, a vice president, was aware and approved of the industryrnstandard (to have documents notarized outside the presence of the signer) beingrnfollowed.  She assumed her supervisor’srnboss would have approved and been aware of the same. A Bank of America managerrnsaid she read the first paragraph of a document, and then located the place shernneeded to sign.  She spent 1-1/2 to 2rnhours per day on signing documents and two to three minutes on each.</p

OIG provided the shipping log kept byrnone Bank of America manager showing that she had signed 67,908 documents (93 documents per day) andrnnotarized 1,390 during a two year period. rnRecords show she had notarized her own signature on two of therndocuments.</p

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OIG also found that some affidavits itrnreviewed contained errors in the mathematics required in judicial foreclosurernstates.  Bank of America was found tornhave calculated per diem charges inconsistently even within the same documentrnand there were instances of incorrect legal descriptions of properties conveyedrnto HUD.   Out of 36 affidavits forrnforeclosures that were reviewed for the Chase inquiry, the bank was unable tornprovide documentation for the amount of the borrowers’ indebtedness listed onrnthe affidavits for 32 and of the remaining four, OIG found the amounts to berninaccurate in three. </p

The findings of OIG in their reviewsrnwere used by the Department of Justice in reaching the recent $25 billionrnsettlement with the servicers.</p

The five full audits can be found here.

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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