Robo-signing is a practice used by mortgage lenders and other financial institutions to authenticate documents without the actual signatures of real people. This practice has part of the reason for recent reforms in the lending industry.


Anyone who has ever bought a home or entered into any complex legal transaction knows that there is a lot of paperwork, and lots of spaces for signatures. Under certain circumstances, the law requires those signatures be verified. One way to verify a signature on a document such as a will is to have it witnessed. Sometimes, an uninterested party can sign as a witness. Another form of verification is to have a signature notarized.

Every state has rules for the establishment of notaries public. These are people who are authorized by the state to witness signatures on official documents, and to place individuals under oath in order to verify their statements. Notaries can usually be found in banks, financial offices and law offices.

A notary public cannot verify information about which the notary has no personal knowledge, or without the person verifying the information being present. Mortgage documents include a great deal of information, and they often require affidavits or verified signatures. However, the process of moving such documents through the financial system can take much longer if each document has to signed, before a notary, by the actual person verifying the information.


For this reason, financial institutions began the practice of robo-signing. Sometimes, these companies would use actual machines to sign documents, like the kind of process the White House uses to sign letters from the President. In other cases, bank employees would sign documents and notarize them without any contact with the person purportedly verifying the information. Some reports have stated that one bank employee signed as many as 10,000 documents in just one month. In many such instances, the person signing the documents and notarizing them had no idea if the information contained in the documents was correct.

As long as the real estate boom was going strong, no one really had a reason to complain about the process. It was making the efforts to refinance and buy homes easier, even though it was a technical violation of the law. Also, the process generally was not commonly known to people outside the industry.

Rethinking Robo-Signing

When the housing market crashed in 2008 and foreclosures began to rise, it was discovered that many of the documents being used by the banks as the basis for their foreclosures were improper, and could not be admitted as evidence in court. Due to the public outcry and successful defenses against foreclosures, most of the large mortgage lenders suspended foreclosures and took another look at the practice of robo-signing.

In an agreement between the major lenders and the attorneys general of many states, the lenders agreed that robo-signing and fake notarizations would stop. The agreement requires that the person whose name is on the signature line actually signs the document, and that affidavits used to foreclose on a property may not be presented at court if the person signing the affidavit was not present at the time it was notarized. It also stops companies from giving incentives to employees for processing affidavits more quickly, or for imposing deadlines on employees that makes it harder for them to verify the information in the documents they are processing.

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