Robo-Signing Still Making Headlines As Wells Fargo Settles Another Lawsuit

“Robo-signing,” the term coined to refer to bank officials who quickly approved mortgage foreclosure documents without actual knowledge of the validity of the grounds for foreclosure, has been spurring lawsuits and making headlines since as far back as 2010. It was in the news again with the recent settlement by Wells Fargo of another robo-signing lawsuit. In this lawsuit, brought by shareholders against Wells Fargo’s board of directors, the plaintiffs alleged that robo-signing at Wells Fargo was a breach by the individual defendants of their fiduciary duty of loyalty owed to Wells Fargo and its stockholders.

The $67 million settlement requires Wells Fargo to provide down payment assistance to affected home buyers, and counseling support for its customers that are having difficulty making mortgage payments. It also requires Wells Fargo to integrate its operations of residential mortgage servicing in order to ensure consistent management of business.

This latest settlement follows a $25 billion settlement in 2012 involving Wells Fargo and other financial institutions, stemming from faulty documents and questionable foreclosure practices. That settlement with state attorneys’ general cost Wells Fargo $4.3 billion.

The fact that lawsuits such as this continue to exist nearly a decade after the beginning of the mortgage crisis underscores the scope and depth of that crisis, and reminds us of the many varieties of legal disputes that arose as a result. For loan originators targeted by major banks for supposed “breaches” that allegedly require “repurchase” or indemnification, this is also yet another reason to remember to take nothing in the plaintiff’s allegations at face value without scrutinizing those allegations thoroughly.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bilzin Sumberg - Mortgage Crisis & Financial Services | Attorney Advertising

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