In Maryland, hundreds of foreclosure cases were flagged for review by courts after widespread documentation problems came to light. In those cases, foreclosure lawyers acknowledged in court papers that they allowed others to sign documents on their behalf — in violation of court rules.
While the long-term effect of foreclosure procedural problems is unclear, the short-term results are not. Servicers have hit the brakes on repossessions.
The rate of U.S. foreclosure cases turning into bank-owned property was half as high in October and November as it had been earlier in 2010, according to the most recent data analyzed by investment bank Barclays Capital.
"The decline is a direct result of foreclosure process-related issues, including robo-signing, that came to light in the fall," the researchers wrote, adding that they "expect this slowdown to persist for another few months."
Mike Morin, an Annapolis attorney who represents homeowners in foreclosure, said he has noticed a sea change in how Maryland judges are treating the documentation presented to them.
"Prior to all of this, the clear assumption of every judge in Maryland was that an affidavit submitted by an attorney, under oath that he himself had executed the affidavit, was something you could — forgive the phrase — take to the bank," he said. "With some [judges], it's now quite the opposite."
jamie.smith.hopkins@baltsun.com
twitter.com/realestatewonk
