Notaries and Foreclosures

If you listen to the newsmedia, you would think that notaries are the key to foreclosures, and without them nothing bad would ever happen. It is unclear how this misimpression came to be, but the media is looking for any amazingly spectacular criminal failure to explain the foreclosure situation. In the narrative, the criminal banks that are commiting perjury and just generally submitting sloppy paperwork to courts in judicial foreclosure states would be inhibited by more diligent notaries. Really?!?!? A notary is going to stop someone who is lying about a document from signing his signature? Maybe from using a robot signer, but there are plenty of notaries who are not diligent about their duties, however minimal the role of a notary to begin with.

In some states, a sworn statement submitted to a court does not even need a notary, just an acknowledgment by the affiant that it is sworn under the penalty of perjury. New Jersey allows anyone to submit such a document, it is called a certification here, and no notary could stop that. Now, if the banks were forced to submit actual documentation, then they could be stopped from lying.

The problem with challenging the documentation is that it costs money. To prove something is a fake or wrong, you need contrary evidence, and most homeowners in foreclosure simply do not have access to the necessary information (some were not good of keeping track of their finances to begin with, hence the foreclosure). Even if the evidence can be obtained through discovery, it is expensive and time consuming to do so, and again, few homeowners in foreclosure can deal with the legal fees. So the banks get away with slipshod work and shady practices.

Now is it such a big deal? Most likely not, as most foreclosure cases are pretty simple and straightforward. They would all move faster if not for the court backlog, but I do not see many homeowners in distress with any justification for not paying. Unfortunately, this is a mess of the banks’ own making, from poor underwriting, bad customer service, sloppy recordkeeping, and the pursuit of a quick buck at any cost. It is time for the Federal Government to force the banks to live up to reality and write down these loans on their books, actively pursue real loan modifications, and clean up their foreclosure practices. Until then, these stories will just continue.

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