Citigroup Claims No 'Robo-Signings' Despite Using Foreclosure King


Jeffrey Tew, a lawyer representing multimillionaire attorney Stern, whose Plantation, Fla., firm is under investigation by state Attorney General Bill McCollum for allegedly filing improper court documents, said Citigroup and other banks gave the firm "limited power of attorney" for more than a year until May 2009. He admitted mistakes in some foreclosures but denied a systemic problem, including "robo-signings."

"There hasn't been one piece of evidence that David Stern has done anything wrong," Tew said.

In another deposition, released by McCollum's office this week, a former Stern employee said a manager signed up to 1,000 documents a day without reading them. According to the deposition, some workers were lavished with gifts -- including cars, homes and jewelry -- for speeding up the foreclosure paperwork.

Mark Rodgers, a Citigroup spokesman, said that "pending the outcome of the AG's investigation, Citi is not referring new matters" to Stern's law firm. He declined further comment because of the investigation.

"We believe the integrity of Citi's foreclosure process is sound," Gerspach said during a conference call with analysts, investors and journalists.

Tew said his client's law firm last week laid off about 400 of its 1,300 workers because foreclosures had virtually stopped throughout the nation.

GMAC also stopped referrals to the Stern law firm, and Fannie Mae and Freddie Mac have reportedly dropped him as well.

Tew dismissed the investigations into the mortgage mess as politically motivated and denied that Stern's firm engaged in mass signings of court papers or any other irregularities.

"There hasn't really been any proof of that yet," Tew said. "We have one or two statements from former employees but there's been no proof in court. Let's be realistic, the problem was caused by this once in a century collapse of the economy and the housing market, which created this unprecedented volume of foreclosures and they were being fed into an 18th century legal system."

Reich said the sheer volume of foreclosure cases and the pressure to cut costs appeared to make legal shortcuts a standard practice in the mortgage industry.

"It's all about the bottom line and if a bank can do it faster and cheaper than its rival this way, then presumably the industry norm becomes the use of these sorts of 'robo-signoffs,'" he said.

Allegations of legal shortcuts are the latest leveled against Stern, who has amassed a fortune foreclosing on the homes of struggling families on behalf of lenders.

"From David Stern's perspective, he's a lawyer given defaulted mortgages to foreclose in a court proceeding," said Tew. "So it's really wrong to vilify him. Let's put it this way, there is a well-organized defense bar who is making a lot of money keeping people in their homes."

But it's the booming mortgage-servicing industry that is under legal scrutiny. The attorney generals of all 50 states last week launched a joint investigation into the industry in hopes of pressuring financial institutions to rewrite a sea of troubled loans.

Across the nation, mortgage-servicers, which include units of major banks such as Bank of America Corp., have been accused of submitting fraudulent documents in thousands of foreclosure proceedings.

In Florida, Stern is foreclosure king, operating the large law firm plus a foreclosure processing company and other support businesses that he recently sold off.

  • 1
  • |
  • 2
  • |
  • 3
  • |
  • 4
Join the Discussion
blog comments powered by Disqus
You Might Also Like...