Nye Lavalle - Robo-signing Controversy

Robo-signing Controversy

In the fall of 2010, major U.S. lenders such as JP Morgan Chase, Ally Financial f/k/a GMAC, and Bank of America suspended judicial and non-judicial foreclosures across the United States over the potentially fraudulent practice of robo-signing, a practice first identified and reported by Lavalle in 1999. Robo-signing is a term used by consumer advocates to describe the robotic process of the mass production of false and forged execution of mortgage assignments, satisfactions, affidavits and other legal documents related to mortgage foreclosures and legal matters being created by persons without knowledge of the facts being attested to. It also includes accusations of notary fraud wherein the notaries pre and/or post notarize the affidavits and signatures of so-called robo-signers.

At the 2000 National Consumer Law Conference in Broomfield, Colorado, Lavalle released two white papers, titled 'Predatory Grizzly "Bear" Attacks Innocent, Elderly, Poor, Minorities, Disabled & Disadvantaged' and '21st Century Loan Sharks." In a follow-up report in 2008, titled "Sue First, Ask Questions Later," Lavalle detailed the wide-scale practice of robo-signing in the mortgage servicing industry.

A Washington Post article about the robo-signing foreclosure crisis on October 7, 2010, concluded with Lavalle's warning to the industry when the post wrote "several years ago (2003), on a message board still active on the MERS Web site, one participant (Lavalle) accused the company of participating in fraud and concealing the transfer of loans from public scrutiny." "The company's president and chief executive, R.K. Arnold, responded by insisting that MERS actually increased the transparency of the mortgage system and reduced the cost of homeownership by making the industry more efficient." "We're not perfect," Arnold wrote, "but there's nothing sinister about who we are and what we do."