As millions of Americans struggle under an epidemic of foreclosures, evidence has surfaced suggesting that some of the biggest banks are barely paying attention before signing documents that will push people out of their homes.
Officials at some big banks now admit that so-called "robo-signers" were signing off on thousands of foreclosures a day without actually looking at the details of any of the cases.
State Official Moonlights as Robo-Signer
ABC News obtained a copy of multiple signatures attributed to a Florida lawyer moonlighting as a robo-signer. She had a day job in the Florida Attorney General's office, she somehow managed to vet some 150,000 mortgages in three years. If she worked every day of every year, that would amount to over 130 mortgages a day.
"It appears that most of the mortgage (companies) in fact did use robo-signers," said Mark Zandi, chief economist for Moody's Analytics. "It was a way to try to facilitate the process. They've been overwhelmed by the foreclosed properties, and this was their way of trying to get through those problems as fast as they could."
Concern about the process has prompted officials to halt foreclosure in many places across the country. Authorities have put the brakes of foreclosures in 23 states as they try to figure out if thousands of homeowners were unfairly booted out of their homes by the banks.
Big Banks as Mortgage Factories?
"The big banks have kind of become mortgage factories," said Dennis Ammann, president and CEO of the small Peoples Bank in Mendenhall, Miss. Ammann says that at his bank, foreclosure is an option of last resort.
"I think the larger your bank gets, the further out of touch it gets with its customers," Ammann said. "With community banks, you have a relationship with your bank and your banker."
Foreclosure Crisis: Robo-Signers Blamed for Mortgage Mistake
One man caught in the middle of the foreclosure nightmare was former school teacher Tom Wood from Tampa, Fl. He poured his life savings into a modest condo and faithfully paid the mortgage.
Wood's mortgage bank went under, and when his loan finally ended up at Bank of America, some records were missing. According to Woods, the next thing he knew, he was served with a foreclosure notice, despite his willingness to pay his mortgage.
"When I got the information, I was totally shocked," Wood said. "When I go to the bank, nobody knows what's going on. And they pull it up on the computer, there is nothing there."
Wood's attorney, Matt Weidner, was one of the first to discover the rash of irregularities. Weidner says Wood's foreclosure should never have been processed, claiming it was approved by a robo-signer.
"The industry got wild and out of control, and it didn't follow the rules that had been in place," Weidner said.
"Rocket Dockets" Put on Hold
The foreclosures process is in such chaos that while some people are being evicted from their homes, others may get the opportunity to get their homes back.
Judges who had been flying through tens of thousands of foreclosures an hour in so-called rocket dockets may now reverse their summary decisions, allowing homeowners to return home. That means that banks could have more incentive to negotiate with borrowers instead of evicting them.
"This foreclosure crisis has now been going on for five years ... but we're very close to the end of the worst of it," said Zandi. "I do think as we make our way into 2011, particularly 2012, we're going to start feeling a lot better about how things are going."