PHH Mortgage Company has been fined $290,000 for signing foreclosure affidavits that the company knew would later be altered by its attorneys and for signing affidavits using someone else’s name, according to an order released today by the Illinois Department of Financial and Professional Regulation (IDFPR). The violations were found during an ongoing special investigation of 20 Illinois licensed mortgage servicing companies, which was launched last year after learning of foreclosure improprieties across the country.
“At a time when homeowners are facing the possible loss of their most precious asset, homeowners have a right to expect their loan servicing company to file accurate and honest paperwork,” said Brent E. Adams, Secretary of Financial and Professional Regulation. “Time and again, the Department has sought to emphasize to loan servicing companies that home foreclosure is no time to cut corners.”
The order, signed by Manuel Flores, Director of IDFPR’s Division of Banking says that in at least 19 files, PHH failed to sign affidavits after they had been altered by the company’s attorneys and that PHH’s knowledge of and complicity with this process is evidenced by the fact that the original affidavits were incomplete and contained notations such as “will add” when they were tendered to the law firm of Fisher and Shapiro. The law firm, in turn, under penalty of perjury and acting on behalf of PHH, then attested to the completeness of the altered affidavits although they had not been reviewed or re-executed by PHH.
The Department discovered other evidence of improprieties on the part of PHH employees in 16 of the 19 affidavits. These 16 affidavits were identified as having all been signed and attested to by the same PHH employee in his or her official capacity. Yet, the Department noted no less than five distinctly different signatures attributed to this same PHH employee, leading the Department to conclude that at least four different people used one employee’s name to sign the affidavits. PHH has ten days to request a hearing on the Department’s order.
In December 2010, Department issued a 9-point “affidavit preparation expectations” plan establishing best practices for the handling of foreclosure-related documents. Under the Department’s order, PHH has violated both the Residential Mortgage License Act of 1987 and these best practices established, publicized, and agreed to by several loan servicers late last year.
The 9-point plan:
- Affiants who sign affidavits in connection with foreclosure proceedings shall not use signature stamps to sign affidavits.
- Affiants signing affidavits stating the amount owed by a borrower (hereinafter “prove-up affidavits”) shall confirm that the numbers accurately reflect the numbers in the licensee’s business records and are totaled correctly.
- Affiants shall be individuals, not entities.
- Affiants shall have the level of knowledge necessary to submit an affidavit in a judicial proceeding.
- Lenders and servicers shall have processes in place to seek to ensure that affidavits used in connection with foreclosure proceedings are true, accurate, and complete, including that prove-up affidavits accurately reflect the amount due to the licensee.
- To the extent that an affidavit is notarized, it shall be done in compliance with the law of the state in which the affidavit is being notarized, which generally requires that the affidavit be executed in the presence of the notary after the notary has administered the oath and that the notary appropriately dates the prove-up affidavit.
- When using a form affidavit, Affiants shall not leave blanks or incomplete statements in the affidavit. Affiants shall date their signatures by hand on affidavits.
- When the Affiant’s signature is not plainly legible, the name of the Affiant shall be printed on the affidavit in order to permit the identity of the Affiant to be known.
- Lenders and servicers shall not file unsigned affidavits with the court.
Homeowners facing foreclosure and/or who have concerns or questions about the process may contact IDFPR’s mortgage hotline (800) 532-8785.
Click each of the following to view the Order, Exhibit A, Exhibit B, and Exhibit C.