Posted Sep 22, 2010 03:55 pm CDT
A mortgage employee charged with reviewing 10,000 foreclosure cases a month to make sure they were legally justified now admits he never read the paperwork, opening the door to foreclosure challenges across the country.
Ally Financial employee Jeffrey Stephan made the admission in a deposition, spurring his employer to halt evictions of homeowners in 23 states this week, the Washington Post reports. Other companies, including Fannie Mae and Freddie Mac, may also be affected because they used Ally, formerly known as GMAC, to service their loans.
Stephan, who headed Ally’s document processing team, was supposed to read the documents for accuracy and legal justification, and to sign them in front of a notary. He admitted he signed the documents, but didn’t carry out the other duties. With 10,000 documents clearing his desk a month, he had only 1.5 minutes to review each document, based on an eight-hour day.
“How the nation’s foreclosure system became reliant on the tedious work of a few corporate bureaucrats is still a matter that mortgage lenders are trying to answer,” the story says.
Iowa Assistant Attorney General Patrick Madigan told the Post that Stephan’s actions could be considered an unfair and deceptive practice—and it has huge implications. “If servicers are submitting court documents that aren’t true or that have not been verified, that is of great concern,” said Madigan, chair of a national foreclosure prevention group made up of state attorneys general and lenders.
ABAJournal.com: “GMAC Suspends Foreclosures in 23 States After Questions About Legal Paperwork”
Updated at 1:30 p.m. to correct number of states where evictions were halted and to add prior coverage.