Wells Fargo & Co. has arrived fashionably late to the robo-signing party.
In admitting that employees had falsely attested knowledge of borrowers' debts in 55,000 affidavits, Wells confirmed the privately voiced suspicions of some rivals: that its court documents had the same flaws as those of Bank of America Corp., Ally Financial Inc.'s GMAC Mortgage unit and other lenders.
Wells committed similar sins, but it controlled the damage in a very different way at a sensitive time — as the company has been rolling out its brand in the former Wachovia markets. Its low-key, though inaccurate, early statements saved Wells from the degree of reputational harm that others endured.
Rather than engaging in a lurching nationwide foreclosure moratorium, Wells insisted that its procedures were good and that it saw no need to halt foreclosures. Even though its use of at least one robo-signer was already publicly documented, the San Francisco-based company asserted on Oct. 12 that "our affidavit procedures and daily auditing demonstrate that our foreclosure affidavits are accurate."
On Thursday, Wells spokeswoman Teri Schrettenbrunner walked that statement back. Though many affidavits' attestations of a signer's familiarity with a case may be inaccurate, she said, "we don't believe that the issues relate to the quality of the underlying data. We do not believe they resulted in any foreclosures that should not have occurred."
Schrettenbrunner added: "We have said all along that when we find errors we fix them." In this case, that means attempting to retract the false affidavits and getting 160 "authorized signers" spread around the country to redo the work in accordance with jurisdictional legal standards.
Wells said that not all of the 55,000 affidavits are flawed, and that it's taking action on them out of a surfeit of caution.
But Raymond Brescia, an assistant law professor at Albany Law School, questioned whether the company would attempt to rescind such a high volume of court filings without cause. "It's a pretty significant to refile documents in court," he said. "I think most lawyers, if they think their papers are going to be fine, they're not going to refile something,"
Nor should it be assumed that Wells will be uniformly allowed to withdraw its prior affidavits without facing sanctions, Brescia said.
"In most instances the bank is going to have to make a motion to file amended pleadings, and a court is going to have to determine whether to allow those amendments," he said. "Judges have a lot of discretion."
Ducking the initial industrywide freakout and foreclosure halt over bad affidavits may come at a price, Brescia said. In some courts, he said, Wells may face a reckoning for taking longer to reveal its mistakes.
"Did they still push cases despite the fact that they may have had defects in them?" Brescia asked. "If so, the lawyer in that case is going to fare much worse before the court tomorrow than the Bank of America attorney who said, 'We've got problems.' "
Whether Wells' initial refusal to embrace a moratorium was the result of stubbornness or a better initial understanding of its own servicing processes, the company's position that its work had no substantive flaws has become the industry standard.
The Mortgage Bankers Association dismissed the false affidavits as "technical error[s] in the execution of paperwork." Even if affidavits were flawed, the MBA said Thursday, "mortgage servicers have comprehensive quality control procedures in place throughout the foreclosure process."
Consumer groups challenge that assertion.
"Robo-signing as the tip of the iceberg is reprehensible enough," said Kathleen Day, a spokeswoman for the Center for Responsible Lending, who argued that the servicers in question had been downplaying the possibility of shoddy and fabricated court filings for years. "We have no reason to believe that what started this all … is any different in any other state or with any other lender, or with other types of documents," Day said.
