At Wells Fargo, the report said, employees faced ever-shrinking time frames to process the tidal wave of paperwork. In one March 2008 e-mail, employees were told that they would be required to sign the more than 100 affidavits they received at 9 a.m. each day by noon the same day.
One mid-level manager at the bank told investigators that she discreetly undertook a two-week study in which she and her staff actually read and verified the documents before signing them. Her goal, she said, was “to conclusively show that her department was understaffed and what staffing level would be required to properly prepare and sign the affidavits.”
Within a few days, however, higher-level managers noticed a growing paperwork backlog. “The midlevel manager was directed to stop the study and return to the practice of signing affidavits without reading or verifying data,” the HUD report said.
At Citigroup, some employees told investigators that they signed as many as 200 documents a day and that the numbers grew over time. One employee “indicated that he would sometimes receive 1- to 2-inch stacks of documents multiple times in a day,” the report said.
At Ally Financial, one employee “routinely” signed 400 foreclosure affidavits per day and up to 10,000 affidavits per month, and notaries routinely approved documents for which they didn’t witness the signatures.
“The memorandum references activities from over a year ago that have been addressed as we do all we can to modify loans when possible and to ensure foreclosures are fair when they are unavoidable,” Bank of America spokesman Rick Simon said in response to the HUD report’s findings.
Citigroup responded that the bank has strengthened the way it processes foreclosures. “Since 2007, Citi has worked hard to help families in their efforts to avoid potential foreclosure and stay in their homes,” the bank said in a statement. “Further, as the volume of foreclosures increased in 2009, Citi self-identified opportunities to improve its foreclosure processes and proactively undertook actions to enhance its policies and controls. These included: consolidating operations into one central unit; significantly reinforcing the size and training of our staff; and tightening control processes.”
The long-awaited settlement with the banks filed Monday in federal court is intended in part to end the unsavory practices detailed by HUD investigators. In addition to the $25 billion designated to help struggling borrowers and compensate foreclosed homeowners, the deal includes measures aimed at forcing banks to overhaul the way they pursue foreclosure cases and the way they deal with homeowners hoping to modify loans.
The settlement, which must be decided on by a federal judge, also creates a full-time monitor’s position to oversee and enforce the terms of the agreement if banks fail to make the required changes.
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