60 Minutes has an incredible story detailing how a mortgage document processing company is putting hundreds of thousands of homes in a limbo.
The story describes how one document mill in Alpharetta, Georgia attempted to duplicate lost affidavits of assignment after the originals were lost. Lost documents was a systemic problem. It is a natural problem of non-
pass through mortgage backed securities. There is no ownership of specific mortgages. Rather, payments on thousands of mortgages are distributed to thousands of investors. No one really owns the home, but instead a portion of the payment. Some investors purchased hedges for and against non-performance. Those investments paid off when fewer people paid their mortgage: such a position was meant to compensate for another "long" position. Either way, the documents that showed who actually owned the mortgage itself were lost.
DocX, the document mill in question, hired people for $10 an hour to robosign. They were expected to sign approximately 350 documents per hour. In order to make it simpler, they let all staff use the same name - Linda Green. It was easier to remember and simple to sign. Down the hall, a staff notary stamped the documents.
Now the banks can't foreclose. They cannot prove ownership in a court of law. Sheila Bair says that it would take a several billion cleanup fund to expedite the homes through a process outside of the courts.
In some cases, residents can stay in their homes because of this problem. Other times, the home sits empty, unable to be resold. It all means that housing prices continue to drop while the time that it takes to unwind from the Great Recession is only lengthened.
The report names Bank of America, Deutsche Bank, Wells Fargo, US Bank, HSBC, and Citigroup. All of them used Lender Processing Services (LPS). LPS contracted with DocX.