Illinois Fines First Company in Foreclosure Document Probe

IL found docs with “… the same PHH employee’s name in “no less than five distinctly different signatures …” … IL levied fines & the judge stopped the foreclosures.

Illinois fines first company in foreclosure document probe
Department of Financial and Professional Regulation finds evidence of ‘negligence or incompetence’ by New Jersey-based PHH Mortgage

By Mary Ellen Podmolik, Tribune reporter
8:03 p.m. CDT, June 22, 2011
The state of Illinois said it found evidence of “negligence or incompetence” in PHH Mortgage Corp.’s foreclosure procedures and levied a fine of $290,000.

The order, issued late Wednesday, comes eight months after the state’s Department of Financial and Professional Regulation began investigating 20 state-licensed mortgage companies. It is the first disciplinary action taken.
Mount Laurel, N.J.-based PHH, along with 16 other companies, remains under investigation by the department. PHH did not return phone calls seeking comment.

The state, which asked PHH for 10 complete foreclosure case files, also looked at 20 cases that foreclosure law firm Fisher & Shapiro LLC admitted in Cook County Circuit Court may contain faulty foreclosure documents. In 19 of those cases, state investigators found evidence that PHH had submitted signed but incomplete paperwork to Fisher and Shapiro, with notations that other relevant facts would later be added.

The state also found that 16 of the 19 cases contained prove-up affidavits, used to verify the amount owed by the borrower, that contained the same PHH employee’s name in “no less than five distinctly different signatures, leading the department to conclude that at least four affiants used a person’s name other than their own to sign the affidavits.”

“We’re not at the point of calling it forgery, because forgery is a crime, and we’re not a law enforcement agency,” Brent Adams, head of the state agency, said Wednesday. “We do allege that there was something illegal here. It is not a safe and sound mortgage practice for different people to be signing someone’s name in an prove-up” affidavit.

In March, following Fisher and Shapiro’s admission of altered documents, Cook County Circuit Court Presiding Judge Moshe Jacobius temporarily halted more than 1,700 foreclosure cases. Jacobius said Tuesday that the number had grown to 2,127 on hold.

In its order, the state said PHH’s conduct “at the very least rises to the level of negligence or incompetence.”

A maximum fine of $25,000 can be levied for each violation of the Residential Mortgage License Act. The state fined PHH $10,000 for each of the 19 files with faulty paperwork and $25,000 for four instances in which an employee used a name other than his or her own to sign the documents. PHH, which was served with the order Wednesday, has 10 days to request a hearing on the action.

The state’s actions are separate from a national probe by state attorneys general into faulty foreclosure procedures and allegations that foreclosures were processed without being reviewed, an activity that has come to be known as robo-signing.

Adams said the state continues to review its own cases for those potential problems.

“As the glut of foreclosures became more intense, that is the backlog became more intense, there were more fill-in-the-blanks,” he said. “We have not completed our investigation into any company.”