If the foreclosure document issue has been around so long, why did it only began to surface recently? The New York Times answered the question with the name of Thomas A. Cox, a retired lawyer who volunteers at Pine Tree Legal Assistance. When happening to work on a foreclosure file, Cox immediately noticed that some of its documents from GMAC were being signed by Jeffrey Stephan with the title of “limiting signing officer.”

“I saw a couple of GMAC cases that came across my desk that that had affidavits by this fellow Jeffery Stephan,” said Cox in an interview with The AmLaw Daily . “…The combination of factors led me to a real strong suspicion that he really didn’t know anything, that he was just a paper signer.”

According to the same NYT article, Stephan “casually” admitted to preparing “400 foreclosures a day for GMAC and that contrary to his sworn statements, they had not been reviewed by him or anyone else.” Although GMAC had initially called this a “technicality,” GMAC has stopped foreclosures that need to be approved in courts in twenty three (23) states –as mentioned in the previous article – and Cox won the right to depose Stephan.

Stephan is but one example of “robo-signing,” which the National Association of Attorneys General stated on Wednesday “may constitute a deceptive act and/or an unfair practice or otherwise violate state laws.” Cox mentioned in his interview that the robo-signing problem “has been going on at least since [his] early involvement in 2008.”

The Wall Street Journal reported today that the nationwide controversy has caused banks stocks to decrease in value while “putting millions of delinquent borrowers in limbo.” The problem is further exacerbated by the different paces of the finance industry and the U.S. legal system. One reason, according to WSJ, is because the first aims for profit and efficiency with the help of electronic processing while the second “relies on physical paperwork filed by individuals.

Charles Hugh Smith of Daily Finance lists ten major developments of this slowly unfolding crisis. While the final outcome is unpredictable, Smith discusses how this could bring up the problem of ownership. For example, WSJ reported that one family has reoccupied their recently lost home, claiming that it had been wrongfully foreclosed. With the moratoriums issued by some banks, Smith also writes there is a higher incentive for underwater homeowners to stop paying their mortgages “with no near-term consequences because the foreclosure system is frozen.” The rest of his points can be found here . 

*Any information on all blog entries should not be construed as legal advice. If you have any legal issues, please consult an attorney.