Robo-signing of affidavits and other legal documents used in Maryland foreclosures has led to the predictable scenario where long after the foreclosure was approved, junk debt buyers are now seeking foreclosure deficiency judgments on what was the difference between the amount of the mortgage and the price fetched at the foreclosure sale.
Most participants in our legal system agree that robo-signing (including consensual forgery, perjury, and falsely stating one has personal knowledge of events) is an assault on the integrity of the courts. But as is well known, when faced with admittedly fraudulent documents, most courts simply looked the other way, and allowed the foreclosures to go through.
A recent article in the New York Times by Gretchen Morgenson illustrates the long shadow that robo-signing in foreclosures has created, and shows why robo-signing’s negative effects on people’s legal rights will continue for years to come. By way of example, although the state of Maryland disciplined two lawyers for admittedly submitting false affidavits in thousands of foreclosures, not a single one of those foreclosures was overturned. See here and here. Now the deficiency amounts from cases like these are being sold for pennies on the dollar to junk debt buyers, who are reopening the foreclosure cases and seeking tens or even hundreds of thousands of dollars from former homeowners who thought their cases were finally over. The good news in Maryland (unlike in other states) is that a law was passed which shortened the statute of limitations from twelve to three years on seeking foreclosure deficiency judgments.
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