A Las Vegas attorney who represents people facing foreclosure has accused Wells Fargo of forging loan documents. The allegation is the latest sign that efforts to hold mortgage lenders accountable are escalating in Nevada.
In court papers filed this month in Clark County District Court, attorney Dave Crosby alleged bank employees committed forgery and fraud in making a $350,000 loan to a father of four who was unemployed at the time.
"They forged signatures, they backdated documents," Crosby said. "We've got them cold."
Crosby said the bank has presented two deeds of trust for the same property. One bears the signature of Olivia A. Todd, who on Jan. 27, 2010, was identified as an assistant secretary with MERS, Inc., a mortgage servicer from the Phoenix area and a co-defendant in the lawsuit.
But on Feb. 16, 2010, Todd's signature appears on a second deed of trust, where she is identified as the firm's president. Both assignments were notarized as authentic, Crosby said in court papers.
Crosby made his allegations in a request to have a judge review three failed mediations between him and his clients, Ryan and Mical Henderson of Las Vegas, and lawyers with Wells Fargo, formerly Wells Fargo Home Mortgage.
Attempts to contact bank attorney Kevin Soderstrom were unsuccessful. Calls to Wells Fargo also went unreturned.
Nevada Foreclosure Mediation rules allow for a judicial review of failed mediations. In Clark County, District Judge Donald Mosley hears all such reviews.
The Legislature created the Foreclosure Mediation Program in 2009 to help thousands of troubled homeowners in the state, considered ground zero of the U.S. housing crisis, where tens of thousands of homes have been abandoned or foreclosed and a staggering 80 percent of homeowners owe significantly more than their homes are worth.
But banks and title insurance companies have not always been able to prove they own the mortgage and have the right to foreclose.
The Henderson case is the latest shot across the bow of mortgage lenders. The Nevada Supreme Court has issued rulings favoring homeowners in several recent cases on appeal. Nevada Attorney General Catherine Cortez Masto is expected to file criminal charges against bank and title company employees, as well as notary publics, over allegations of robo signing.
The term applies to a practice of signing affidavits attesting that bank officials have reviewed documents and found them proper even without making any review.
When the robo-signing scandal erupted last October in Florida, bank employees admitted to signing 10,000 documents a month without knowing whether they are legitimate.
Masto's office declined comment on any plans for criminal action against robo-signers. She has taken an aggressive approach to holding banks accountable, and the Legislature earlier this year enacted new laws regarding robo signing.
Crosby said he suspects robo-signing is widespread in Nevada. One of his cases was the subject of an appeal filed with the state's high court, and he used the lender's own words against it.
Supreme Court justices found in favor of Crosby's client, Moises Leyva, ruling unanimously that lenders have an absolute duty to strictly follow foreclosure mediation rules exactly as written.
More important, the high court ensured lenders couldn't simply provide a sworn statement, often from their own employees, that they were the lender even when they failed to provide a verified copy of the deed of trust.
"They admitted how disorganized they were, that they lost paperwork," Crosby said.
In court papers, Crosby accused Wells Fargo of continuing to play outside the lines. He alleged that a document the bank produced during mediation was backdated and bore a style of notary stamp that didn't exist at the time it was signed. The document is included in the court file.
He also alleged that two documents bore the name of a bank employee and "are notarized by the same notary, (but) both signatures do not belong to the same person."
Crosby wants Mosley to rule that Wells Fargo acted in bad faith, to award sanctions for the "obvious forged, backdated and falsified documents" and to award cash sanctions.
Crosby will ask Mosley to fine Wells Fargo an amount equal to the difference between the loan and the home's current value.
The Supreme Court in its recent decision has made it clear to judges that such sanctions are appropriate when lenders are found to have acted in bad faith. A hearing has been scheduled for Oct. 6.
Review-Journal writer Chris Sieroty contributed to this report. Contact Doug McMurdo at firstname.lastname@example.org or 224-5512.