States at forefront of fight over foreclosure: New bill in Illinois, lawsuit in Ohio

The practice of “robo-signing” by banks and other loan servicers in the mortgage foreclosure process has resulted in new legislation in Illinois and a first-of-its-kind lawsuit in Ohio.

Stateline Midwest, Volume 19, No. 11- December 2010

The practice of “robo-signing” by banks and other loan servicers in the mortgage foreclosure process has resulted in new legislation in Illinois and a first-of-its-kind lawsuit in Ohio.

The goals of Illinois HB 6951 are to ensure the integrity of foreclosure documents and to make certain that lenders are complying with federal loan-modification requirements, Attorney General Lisa Madigan, who introduced the measure in November, said in a press release.

Under the bill, lenders would have to verify the efforts they have made to help homeowners, including proof that they have considered loan modification. In addition, any affidavit filed as part of the foreclosure process would have to contain a detailed description showing that the person who signed the document has personal knowledge of the facts of the case. A bank would also have to prove that it holds the loan on the home and has the right to foreclose.

In October, all 50 states joined forces to investigate concerns about “robo-signing”: the signing of affidavits and other documents in foreclosure proceedings (judicial or non-judicial) without confirmation of the accuracy of these documents. One week before this investigation was announced, Ohio became the first U.S. state to file a lawsuit against a mortgage servicer over fraudulent affidavits filed in foreclosure cases.