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Courts, Regulators Tightening The Reigns On Foreclosure Processes

The mortgage-servicing industry remains under considerable pressure from state attorneys general, federal regulators, lenders and judges to overhaul foreclosure proceedings with more order and due process, and to ensure that delinquent homeowners are treated fairly.

The Maryland Court of Appeals, for example, set a new policy allowing judges to require lawyers to testify to the accuracy of key affidavits in foreclosure cases. Maryland judges may also now order Notaries to appear in court to verify that proper notarial and other handling procedures were followed on affidavits, and they may appoint special masters to scrutinize foreclosure documents. Because Notaries are integral to these processes, a key focus is empowering employee Notaries to perform their duties as the law requires — without employers demanding “shortcuts” like absentee signers.

Some of the nation’s lending giants also became proactive in ensuring a fair process. J.P. Morgan Chase & Co. and Ally Financial, Inc. hired outside law firms and auditors to evaluate their foreclosure mechanisms. Bank of America Corp. announced a new policy requiring the affiant to be in the presence of the Notary Public when signing a foreclosure affidavit — even though this practice has long been a legal requirement.

LSI, a vendor management company in the mortgage industry, now requires its Notary Signing Agents to complete all parts of a notarization at the time of the loan signing and in the presence of the borrowers.

Key Points:

  • The mortgage-servicing industry remains under considerable pressure to overhaul foreclosure proceedings
  • Some courts are ordering attorneys, Notaries and others to appear to verify that proper document procedures were followed
  • Lenders are also taking proactive steps to ensure a fair process

David Thun is an Associate Editor at the National Notary Association.

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