Foreclosure Fraud in Illinois: Are Your Mortgage Documents Valid?

 Posted on April 06, 2020 in Foreclosure

Evaluating the legality and validity of your home loan documents is a critical first step in the foreclosure process. During the housing boom, many mortgage lenders cut corners and failed to properly comply with securities laws in their pursuit of maximizing profits during the boom. If you have received a notice of foreclosure, your loan documents should be reviewed and evaluated for legitimacy by legal counsel as soon as possible.

Lenders And Banks Originated Invalid Documents

At the height of the boom, many lenders were doing so much business, so quickly, that what resulted were work process failures that caused invalid loan documents to be originated and issued to consumers and other lenders. Potential cases of lender misconduct include robo-signing, predatory lending, inaccurate documentation and defective transfers.

Robo-Signing Paperwork

Robo-signing is the practice of documents being signed and notarized by a computer. Unfortunately for the banks, in the case of mortgage documents robo-signing is illegal. By law, mortgage documents must be signed by an actual person, not a computer program. Additionally, mortgage documents must be witnessed and signed in front of a notary.

Predatory Lending

Predatory lending occurs when lenders authorize loans to borrowers under false pretenses; knowing that borrower will not realistically be able to repay the loan. Some types of predatory lending practices include:

• Originating false documents to inaccurately record down payments;
• Artificially increasing property value; and
• Various deceptive tactics to originate loans.

Predatory lending practices can generally result in the determination that the loan was invalid from inception.

MERS Failures

MERS is an acronym for the Mortgage Electronic Registration System. The system was created as a means to track mortgage securities ownership. This electronic tracking system was so overwhelmed during the housing boom and subsequent bust, that it failed to maintain accurate records in many cases. Due to the enormous amount of activity, many loans were not transferred correctly or were improperly securitized. Heavy reliance on this electronic system caused many banks and lenders to fail to obtain the correct paperwork when they initiated the ownership transfer of the security.

Lack of Legal Standing to Foreclose

If the the loan transfer is determined to have not been valid, the party attempting to foreclose may in fact have no legal standing to do so. Additionally, if the bank does not actually possess the physical documents of your loan and mortgage, the institution has no legal standing to foreclose on the property.

Contact a Lake County Foreclosure Defense Attorney

If you are facing a possible foreclosure and would like to learn more about your options, contact an experienced Libertyville foreclosure lawyer. At Newland & Newland, L.L.P., we offer free consultations so that you can get the guidance you need. Call us today at 847-549-0000 to schedule an appointment.

Sources:

https://www.investopedia.com/terms/r/robo-signer.asp

https://www.mersinc.org/homeowners