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Notary Bulletin

Feds, State AGs Nearing 'Robo' Settlement With Major Banks

Expectations are running high that the Federal government and a group of state Attorneys General are near a settlement with a number of major financial institutions over the improper notarization and document signing practices at the heart of the “robo-signing” crisis.

A settlement — costing the banks an estimated $20 billion to $25 billion — could be reached in a matter of weeks, U.S. Housing and Urban Development Secretary Shaun Donovan told a recent meeting of the U.S. Conference of Mayors. Most of the money would be used to write down portions of mortgages for up to one million homeowners. In exchange, the banks would avoid potential lawsuits and other legal action brought by the agencies taking part in the settlement.

The “robo-signing” crisis broke in late 2010 when it was discovered that countless thousands of documents filed in foreclosure proceedings on behalf of major financial companies were improperly signed and notarized. As the nation’s financial institutions work to put the crisis behind them, more attention will be paid to making sure proper notarization and document-processing procedures are followed. Proper training for Notaries and their supervisors will be more important than ever.

Even when a settlement is reached, companies may face additional liability over improper document practices. Several states are not part of the settlement talks and a number of legal actions have been filed independent of the talks. Nevada has filed criminal and civil cases against a mortgage servicing company, and the Massachusetts Attorney General is filed a civil lawsuit against a number of banks. In addition, at least one class-action lawsuit has been filed on behalf of homeowners.

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