“Excuse me, I have to go. Somewhere there is a crime happening” –Robo-cop 1987
The man-machine that was Robocop might have viewed some of the actions of his partial name sake, the “Robo-signers” as being somewhat close to a criminal act. Current news of a sharp and deep drop in home foreclosure rates, while on paper looking like an incredible sign of better times coming are likely a result of fallout from the robo-signers fiasco.
♦ What is a Robo-signer?
Many large banks wanted to rush the paperwork on up to foreclosures to minimize the financial hit they would need to take from the lengthy and involved process. This was specifically true in the companies JPMorgan Chase and GMAC.
Combined these companies had a few hundred thousand loans to process. To speed up this process these companies hired a few worked to help review the documents speedily. These signers would were sometimes able to review up to 10,000 documents a piece. They were able to complete the “reviews” so fast they became known by the nickname “robo-signers”.
The job of these members was supposed to be checking all the paperwork for full and complete paperwork, making sure all the “ducks are in a row” and then sign that everything was complete. The rate at which these robo-signers completed these files show that many of them simply became signing machines. Many of the workers themselves admit that they had no time to fully review all of the files they were signing.
Because of these revelations GMAC and Chase put foreclosures on temporary hold, giving a little breathing room to those in the foreclosure process, but no real relief, since it is mostly a procedure matter, and not a matter of the substance of any cases.
♦ The drop in foreclosures
In October there was a 28 percent drop-off in foreclosure filings. In November there was a 21 percent drop off in foreclosure filing. At first glance these numbers seem like an incredible sign that the good times are coming. –Break out the champagne and lets have an end of the recession party-
On second glance these numbers are simply misleading. With many large lending institutions putting all of their foreclosures on hold to investigate the procedural issues falling out for the “robo-signing” scandal it is really no surprise that these number dropped rapidly. This drop may give the people being foreclosed on a little breathing room, but since it is simply a procedural matter it should not affect the actual final resolution of any foreclosures.
There may be a few people that may be able to swing a renegotiation or work out a short sale that could possibly benefit from the cautionary pause in foreclosures, but most people in foreclosure will not be given anything more than a little bit of time.