False Affidavits in a Foreclosure Proceeding

What Is a False Affidavit in Foreclosure Proceedings?

In about half of the U.S. states the law requires a lender to process a foreclosure in a court of law. This involves filing a foreclosure affidavit. A foreclosure affidavit is a written document stating that: 1) the lender owns the loan that is being foreclosed; and 2) the borrower is in default on the loan. The affidavit should include the interest rate on the loan, the balance remaining, as well as the number of payments that the borrower has missed. And, lastly, it should include all of the fees and costs of the foreclosure.

Therefore, a false affidavit in a foreclosure proceeding is an affidavit submitted by a lender which contains false information. For example, in the affidavit, the lender may state that the borrower has missed more payments than in fact the borrower has missed. In addition, the person who completes and signs the affidavit must have personal knowledge of the truth of the information in the affidavit. So, if the affidavit is signed by someone who has not reviewed the loan documentation and history of the loan at issue and does not personally know the truth of the information, the affidavit can be considered false.

Sometimes false representations may be made in an affidavit intentionally. And often they are simply the result of carelessness on the part of the lender and its employees.

Not all states require that foreclosures be prosecuted in a court action. In those states, a declaration is required, rather than an affidavit. However, the same issues apply. A borrower facing foreclosure would want to know what the procedures are in the state in which they live.

Some states that have non-judicial foreclosures, such as California and Washington, also require the bank to contact a borrower personally to discuss options to avoid foreclosure. Or, the bank must declare that it met the due diligence requirements for attempting to contact the homeowner.

The form for these declarations is called a “loss mitigation” declaration, so borrowers in these states should look for these documents and also raise the issue of their lack of validity if they contain errors or misstatements.

  1. What Is “Robo-Signing” in Relation to Foreclosure Affidavits?
  2. What Is the Legal Effect of a False Affidavit in a Foreclosure Proceeding?
  3. What Should I Do If My Bank Used a False Affidavit?
  4. Do I Need a Foreclosure Lawyer?

What Is “Robo-Signing” in Relation to Foreclosure Affidavits?

The mortgage and foreclosure crisis that began with the Great Recession in 2008 led to a sharp increase in the number of judicial foreclosure proceedings. This increase in the number of foreclosures also meant that banks and lenders needed to prepare large quantities of affidavits for judicial hearings. It was recently discovered that many affidavits prepared by lenders were not actually reviewed, and were signed without the employee even verifying that the information was true.

This was called “robo-signing,” due to the robotic, systematic practice of signing all affidavits without even conducting research into the truth of the claims. Bank employees who engaged in such practices were called “robo-signers.” This had gone on for some time, often without the borrower being aware that a false affidavit was used in their foreclosure proceeding.

What Is the Legal Effect of a False Affidavit in a Foreclosure Proceeding?

If a false affidavit is presented in a foreclosure proceeding, the lender can face various legal consequences. For example, the foreclosure proceeding may be ended in favor of the borrower.

The lender may even be subject to civil or criminal penalties for submitting a false affidavit to a court. Or, the court may order the lender to compensate the borrower for losses caused by the false affidavit.

What Should I Do If My Bank Used a False Affidavit?

If a person discovers that their bank used a false affidavit or engaged in “robo-signing”, they may have several possible legal remedies.