Robo-signing of foreclosure documents is just the tip of the iceberg

Robo signing of foreclosure documents is just the tip of the iceberg – more things are going to come as the dangerous drama unfolds.

Two cases in Pennsylvania have been filed that exposes two angles to the foreclosure documentation problem. Both cases are against one law firm Goldbeck McCafferty & McKeever or GMM and the plaintiff is lawyer Patrick Loughren. The allegation is that non-legal personnel have been permitted to submit and proceed with the foreclosure. The firm defended itself by saying this practice has been going on for many years without any objections being raised.

Robo-signing admittedly is a fraud but it does not automatically dismiss the underlying case. Most probably some punitive action is taken or the case is filed afresh.

A far serious issue is the practice of the law by non-lawyers. It is considered a crime in Pennsylvania. Loughern is asking how could attorney’s fees be pocketed by non-attorneys? If this has happened the money should be disgorged!

But of more seriousness than this is the question how can the foreclosure be valid if the proceedings are sans the involvement of any licensed attorney? Federal courts agree with this view of the state court.

If Loughren is successful then the title of sold foreclosed units would come under a cloud. Those who lost their houses could very well take up cudgels. But it is unlikely they would be able to have the foreclosures reversed as the law fiercely protects the finality of sale of foreclosed properties.

Initially the protection given by the law to previous court proceedings tainted by error or worst sill – by fraud, might seem unfair. But the court system would not be operable if each previous judgment was vulnerable to attack. The parties that lost would tend to think invariably that a mistake had been made or the opponents misled the legal proceedings through lies and half-truths. Prior to delivering of final judgment the court seeks out all possibilities of finding out the truth and it takes a stern view if the final judgment is later attacked.

The foreclosure judgment too is similarly protected. This judgment is only the middle step to the final stage of selling off the unit and transfer of the deed. If the deeds were open to attacks then this necessity for finality becomes stronger. Based on this logic it is seen that most, if not all the states lay great stress on the finality of judgments so as to protect the deeds acquired through sale of foreclosed property.