Robo-Signing May Allow Iowa Homeowners Facing Foreclosure to Stay in Their Homes Longer

When an Iowa homeowner defaults on their mortgage for several months, they may face foreclosure. Although most lenders provide loan workout options, such as loan modifications, in order to help homeowners stay in their homes, sometimes these options are not practical. Many people have lost their jobs due to the poor economy, and foreclosure may be their only option.

The number of foreclosures in Iowa and throughout this nation that are taking place is substantial, and loan servicers are understaffed to take on the mass amounts of paperwork that each and every foreclosure brings their way. Because of this, loan servicers have been known to sign foreclosure documents without reading them or verifying who owns the loan.

In order for loan servicers to sign off on foreclosure proceedings, they are supposed to swear on an affidavit in front of a notary that says that trust owns that note. The problem with this is that this process is supposed to be completed for each foreclosure, and banks would have had to do this for thousands of affidavits. When banks are robotically signing these documents without checking to see if the trust did own that mortgage note, this could be fraud.

This illegal process has been identified as robo-signing, and has uncovered issues with the foreclosure process, which could potentially allow delinquent homeowners the opportunity to stay in their homes without making a payment.

How can this be? Because there are issues with foreclosure proceedings due to the robo-signing scandal, many loan servicers have halted the foreclosure process and major banks have delayed many of their foreclosure proceedings until they review necessary paperwork.

Iowa attorneys have been able to stall foreclosure proceedings by asking the servicer to produce the note (the debt on the house). If a servicer can answer the question, "Who owns the loan?" and can produce the correct paperwork, then they have the right to foreclose.

Oftentimes when mortgages are sold to investors, the notes are transferred to a trust. This can occur many times throughout the life of a mortgage, which could have caused the paperwork to have been misplaced. Notarized documentation should follow the loan every time it changes hands between investors. If the note was not transferred correctly to the trust, it could be a huge problem for that financial institution.

Now that the robo-signing scam has come to light, courts are requesting to see the note. If banks or loan servicers cannot produce the note, many times the foreclosure cannot proceed or is delayed and delinquent borrowers remain in their homes.

If the note has not been produced in your case, you may want to turn to an Iowa financial fraud attorney for legal help with your foreclosure proceedings. Call the law office of Brady Preston Gronlund today at (319) 866-9277 for your free legal consultation.