Last Updated Apr 26, 2011 4:58 PM EDT
Ally Financial announced that it is withdrawing 250 active foreclosures in Maryland that were signed by employee Jeffrey Stephan, an admitted "robo-signer," who said he signed off on 10,000 foreclosures per month without verifying any of the information. Stephan signed affidavits testifying that he had reviewed the foreclosure files, verifying the accuracy of the information.
In this morning's story, the Washington Post notes that Ally is going to resubmit the foreclosure files in Maryland, because it believes that the homeowners are in default.
But here's what I'm wondering: What happens to the homeowners of the thousands of other foreclosures that were signed by Stephan? Aren't they going to feel a little bit cheated?
Real estate observers say that today's move by Ally could indicate a much larger problem down the line for the bank. Already one judge has said that Ally hasn't proven it really has the right to foreclose on one homeowner. What if thousands of other former homeowners, who were actually foreclosed on, band together in a class action lawsuit.
Could this take down Ally? And what about Bank of America, Chase, and Wells Fargo? Are there ghosts of foreclosures past lurking for them as well?
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Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and The Equifax Personal Finance Blog, and is Chief Content Strategist at RealtyJoin.com, a community for real estate investors.