A Baltimore judge summoned attorneys from a large foreclosure law firm Monday to explain whether signatures on key documents were genuine, part of the fallout from revelations last year that foreclosures nationwide were being processed based on deficient — or fraudulent — paperwork.
Virginia-based Shapiro & Burson was the third law firm called this year before Baltimore Circuit Judge W. Michel Pierson. He has heard admissions from several attorneys — at Shapiro & Burson and elsewhere — that their signatures on affidavits required to foreclose on homeowners were sometimes made by other people.
That's one way in which judges have responded to an emergency rule passed by Maryland's highest court about seven months ago in the wake of the so-called "robo-signing" scandal. The rule makes clear that the state judiciary has the power to look for problematic foreclosure paperwork, to haul people in to answer questions and — if the explanations aren't satisfactory — to dismiss cases.
Some cases have been dismissed, voluntarily or by order of a judge. Last week a Kent County judge threw out a case — after the home was auctioned and that sale was ratified — because an affidavit misrepresented the nature of the borrower's debt, though the amount itself was likely correct. The mortgage servicer can file a new foreclosure case but will have to start from square one.
Attorney Mike Morin, who represented the Kent County homeowner pro bono, said it's the first such Maryland foreclosure he knows of that was dismissed after a ratified sale because of a "false or fraudulent affidavit."
"It may seem like a minor victory, but to say I was tickled is an understatement," he said Monday.
Courts have discretion under the emergency rule passed in October, and they're using it. Some judges have allowed attorneys to correct defective paperwork and continue on with the case. Others haven't.
Attorney Phillip Robinson of Civil Justice, a Baltimore nonprofit that has challenged mortgage servicers to get them to drop foreclosure cases with improper documentation, fears the true ownership of homes that go to foreclosure auction on the basis of false affidavits could be called into question later.
Others are worried about the effect of the court reviews. They have lengthened the time it takes to make a foreclosure sale official, a burden for buyers accruing interest while waiting to settle, said Paul R. Cooper of Alex Cooper Auctioneers, which conducts foreclosure auctions.
In Pierson's Baltimore courtroom, a parade of attorneys representing mortgage servicers have answered pointed questions under oath.
Attorney Thomas P. Dore of Covahey, Boozer, Devan & Dore in Baltimore County took the stand in January to say he could not verify whether his signature in several cases had in fact been made by him, The Daily Record reported at the time. Last week, called in to testify about 10 cases, attorney Kenneth MacFadyen of Friedman & MacFadyen in Baltimore said none of the signatures were actually his.
On Monday, three attorneys and about a half-dozen notaries appeared from Shapiro & Burson to answer similar questions. Elizabeth Ritter, a special master for the court on foreclosure documentation issues, said most of the firm's cases she reviewed at random had "questionable signatures." Sixteen were chosen for discussion at the hearing.
Bizhan Beiramee, an attorney representing Shapiro & Burson, said almost half of the cases had "delegated" signatures, in which one lawyer authorized another at the firm to sign on his behalf.
Jason Murphy, one of those attorneys, explained which of the signatures that appeared above his typed name had been "physically" made by him and in which cases attorney Erik Yoder had signed Murphy's name while Murphy was handling foreclosure work outside the office.
He said he acknowledged that it would have been better had the attorney initialed next to the signature to make clear that one person was signing for another, "but I don't think it takes away from the fact that these documents had an attorney review."
"One attorney signing for another is very different than a paralegal signing for an attorney," Murphy said.