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Attorneys, notaries on the hot seat over foreclosure filings

Tough questions about the origin and authenticity of questionable signatures on foreclosure documents continued for a third consecutive day in Baltimore City Circuit Court Monday, this time with employees of Virginia-based Shapiro & Burson LLP taking the stand to answer for the law firm’s lax procedures.

To hear Shapiro & Burson’s representatives tell it, other circuit courts have not conducted such exacting show-cause hearings. Whereas other jurisdictions may have accepted the attorneys’ and notaries’ general explanations and apologies, Judge W. Michel Pierson and the special master he appointed to examine potentially problematic cases, former prosecutor Elizabeth A. Ritter, have been persistent in getting to the bottom of how things were done in thousands of foreclosure cases in recent years.

Among the admissions from attorneys and notaries at Shapiro & Burson on Monday and another regional firm, Friedman & MacFadyen P.A., last week:

-Attorneys who were substitute trustees for the lenders in foreclosure cases, due to the volume of cases and time spent out of the office, frequently signed for each other on documents, notarized and not, without making any note to that effect.

-Notaries frequently affirmed that an attorney “personally appeared” before them and signed a document when, oftentimes, the attorney signed the documents outside their presence and brought the documents to be notarized after the fact.

-Corrective affidavits — filings acknowledging that previous signatures were not genuine — were not filed quickly and, in some cases, haven’t been filed at all, as much as a year after the problem was discovered.

Following the Court of Appeals’ adoption of a rule last fall, Pierson and Ritter, who has reviewed a sample of several firms’ cases, conducted the first such hearing in January and have another one planned for later this month. Pierson must decide, given all the irregularities, whether to dismiss the foreclosure cases that haven’t already been dismissed and how to treat cases filed by the firms that weren’t examined as part of the sample.

In the meantime, attorneys who are usually in the driver’s seat, or notaries who usually do their work in an office out of the spotlight, have had to answer for conduct that seems to have been accepted in the industry but doesn’t hold up well to the light of day.

Jason Murphy, an associate at Shapiro & Burson, was on the hot seat much of Monday. He testified he signed for colleague Erik Yoder, and vice versa, according to an agreement the two had, and he testified he did not always sign documents in front of a firm notary, as required by the notaries’ commissions. But he insisted, nevertheless, that the documents were accurate and that other circuit courts had accepted his story.

“These documents are not quote-unquote robo-signed,” he said, referring to the practice whereby employees at so-called foreclosure mills quickly signed reams of documents without reading them to make sure they were correct.

Notaries from the various firms have either testified freely or invoked their Fifth Amendment right not to incriminate themselves. In January and on Friday, attorneys for the notaries saved them from the stand, but on Thursday and Monday, notaries from Friedman & MacFadyen and Shapiro & Burson testified about the firms’ internal procedures. (Earlier this year, a former Shapiro & Burson paralegal reported signature irregularities there to Prince George’s County prosecutors, and they are investigating.)

On Friday, Kenneth MacFadyen admitted his firm has not dismissed any cases filed in the city based on the extensive signature problem, which dates back at least to April 2010, when he stopped signing documents altogether. He said the firm has not even reviewed the cases yet due to layoffs.

“I don’t think we can approve of any of your cases until that happens,” Pierson told him.