Robo-Signers: Unsung Villains of the Meltdown Now Being Pushed to Center Stage

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Poor Jeffrey Stephan. An example is being made of him, and it is not going to be pretty.

Stephan’s job, deep in the bowels of mortgage mill GMAC, was to sign, sign, and sign some more. All he did, all day, every day, was sign mortgage documents – as many as 500 a day! According to the Wall St. Journal, the hapless Stephan, in what must have seemed at the time like the lowest-risk job on the planet, pushed his pen over 10,000 documents in some months.

What exactly was he signing? That all the paperwork for the mortgages was in order. Did he look at the paperwork? Of course not. Everybody knew it: he, his assistants, and his bosses all knew that Stephan, just a tiny cog on a little wheel in the middle of the great mortgage machine, was a human rubber stamp.

I hope he got a few hand massages for his troubles, because he is now being framed as the poster child for the sloppy practices that now threaten to undermine hundreds of thousands of iffy mortgages.

Lawyers, always quick to sniff out potential class actions, have zeroed in on the egregious paper pushing as evidence that those lenders were complicit in mortgage fraud. At the very least, the lack of attention to detail – like, uh, contract law - -- is the loose thread that could unravel tens of thousands of messed-up mortgages.

This will benefit lawyers (of course). But it is only good news if the homeowners somehow are made whole. There’s a long and arduous legal obstacle course between Jeffrey Stephan and a family terrified of losing their home. Confirmation that the mortgage lenders were just as careless as we all suspected is a major first step. But it’s a long way from crucifying the paper-pushers to making it right for homeowners who lost their life savings at the stroke of a robo-signer.


Image courtesy of Morguefile contributor seeman.