What Is a Robo-Signer?

A robo-signer refers to an employee of a mortgage servicing company who signs paperwork such as 澳洲幸运5官方开奖结果体彩网:foreclosure documents robotically without reviewing ❀them. Rather than actually reviewing the individual detail💧s of each case, robo-signers assume the paperwork to be correct and sign it automatically—like robots. In some cases, the software is used to robo-sign. Discover how robo-signers work and how they impact the mortgage industry.

Understanding Robo-Signers

Robo-signers rubber stamp documents without any serious inspection of the materials or documents being ap🌜proved or denied, and so may approve or deny applications that do or do not have merit. As a result, it can lead to unfair, unethical, or even illegal practices. Robo-signing has been revealed over the years by journalists and financial regulators.ꦯ

In the third and fourth quarters of 2010, a robo-signing scandal emerged in the United States involving GMAC Mortgage and a number of major 澳洲幸运5官方开奖结果体彩网:U.S. banks. Banks had to halt thousands of foreclosures in numerous states when it became known that the paperwork was illegitimate because the signers had not actually reviewed it. While some robo-signers were middle managers, others were temporary workers with virtually no understanding of the work they were doing.

How Robo-Signers Affected the Legal Standing of For🎃eclosures

The repeated issue with robo-signers was their tendency to simply advance documents for foreclosure with little time spent processing and reviewing their contents. This stemmed from such problematic circumstances as high workloads and high expectations for turnout. In some instances, signers admitted in court that they put their signatures on as many as 10,000 foreclosure documents in one month.

While such signings are supposed to include a careful examination of the documentation, those♌ procedures were not always followed. Instead, the signer might simply look for basic information, such as an amount owed on a mortgage and the name of the borrower. The rest was assumed to be accurate, and💯 the documents were signed off.

Lack of Understanding

While there may have been inadequate training, robo-signers frequently admitted to not having a complete understanding of the el꧃ements of the documents they were signing. This included not being aware of how such documents might💝 be used in court proceedings.

Lack of Staff and Training

Furthermore, the signers were often short🐎-staffed in relation to the overall workload they were assigned to process at times with little or no instructions🌳 on how to handle the documents. In addition to signing foreclosure documents with little review time, some robo-signers also introduced new errors, such as miscalculating the value of homes or not reporting the effects an appraisal had on that value.

Consequences

The questionable clerical practices of these workers led attorneys of homeowners who faced foreclosure to move to have the cases thrown out, claiming that the 澳洲幸运5官方开奖结果体彩网:documents had no legal merit.

After the existence of robo-signers was made publicly known, forcing foreclosure documents to be reexamined, the workers who engaged in ♌this practice may have faced disciplinary action and termination from the institutions who employed them to perform this task. The mortgage lenders, despite not seeing issues with their work prior to the widespread exposure, might fire a robo-signer for not𒅌 following company policies.

Robo-Signing and Mortgage Securitization

Robo-signing of mortgage documents can complicate matters when the mortgage loan has been packaged into a 澳洲幸运5官方开奖结果体彩网:mortgage-backed security (MBS). Mortgage loans that originate with a bank used to be held by that bank, incentivizing them to review the documents carefully. If they didn'ꦜt, a ไforeclosure could lead to a bank loss.

However, these days, 澳洲幸运5官方开奖结果体彩网:mortgage loans originated by your bank often get sold to another party, which, through a lengthy process, get packaged with other mortgage loans for investors to buy as a mortgage-backed security—a process called 澳洲幸运5官方开奖结果体彩网:securitization.

An MBS investor earns a fixed income from the loans. As a result, a robo-signer by the originating bank or others along the way can lead to a lack of understanding of wh♔ich bank can foreclose on a property. It can also lead to losses for banks and investors since the borrower might not have been qualifie✃d for the loan but got approved anyway due to robo-signing.

The Bottom Line

A robo-signer mindlessly rubber stamps documents or applications without reviewing them properly, which can result in applicants who deserve approval getting denied or those who should be denied getting approved. Robo-signing has been identified as an unfair and unethical practice that exacerbated the 澳洲幸运5官方开奖结果体彩网:mortgage and foreclosure crisis during the 澳洲幸运5官方开奖结果体彩网:Great Recession.