New foreclosure mess: Faulty documents

This article was originally covered by PRI’s The Takeaway. For more, listen to the audio above.

“The lawyer appears to be operating in a parallel mortgage universe.” That’s what New York State Supreme Court Judge Arthur Schack wrote about a recent legal filing. He also called the lawyer involved, “incredible, outrageous, ludicrous, and disingenuous.”

The case points to a trend: lawyers have been submitting fabricated paperwork in foreclosure actions while representing banks. The problem has been happening so much lately that judges are starting to force lawyers themselves to deal with the consequences of their clients’ actions.

There have been numerous methods that banks use to falsify these documents: one is called “robo-signing” — where one person signs documents in several different roles. “You see the same name on four or five different financial entities and you wonder, what’s happening?” Judge Arthur Schack asked PRI’s The Takeaway. He added, ironically, “this person can’t hold a job, they keep moving around,”

Judges are losing their patience for dealing with lawyers guilty of submitting false documents. “Judges who are lawyers really care for the profession,” New York Times national legal correspondent John Schwartz told The Takeaway, “and when they see other lawyers doing the wrong thing then they get really upset.”

There have been consequences for lawyers who present fabricated documents, Schwartz reports. One judge ordered that $20,000 be paid in fines and costs related to papers that he said contained numerous falsities. Some courts require lawyers to vouch for documents that they submit. “New York State, for example, has demanded that lawyers sign a two-paged affirmation saying that ‘I’ve checked with the bank that is putting these papers forward and what’s inside is accurate,'” says Schwartz.

These actions have not been without controversy from the lawyers involved. Some complain that the regulations put too much responsibility on lawyers, and that it puts lawyers in charge of their client’s crimes. There has been some debate about vouching for the documents, but, as it stands, lawyers in New York are required to submit the forms.

“I think that this could be the start of a real pressure push on the legal profession,” Schwartz says, “People don’t like lawyers anyway and if there is a chance that the profession’s reputation could be damaged by… the sloppy documents, then they don’t want to see it. So the pressure on lawyers is going to increase not just in New York, not just in Florida, but around the country.”

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