Another Wells Fargo robo-signerOctober 22, 2010: 1:24 PM ET
Is Wells Fargo's foreclosure process really as sound as the giant bank says?
That's the question raised Friday by a report in ProPublica. The investigative journalism outfit says it has located another Wells (WFC) employee who has admitted to signing foreclosure affidavits without reviewing the case files as required.
The employee, Tamara Savery, twice submitted unverified documents to a Texas bankruptcy court, ProPublica reports. Those weren't the only times she ran afoul of laws obliging affidavit signers to attest to the truthfulness of their claims, the report suggests: she said she "couldn't guesstimate" how often she did so, ProPublica said.
Questions about Wells' practices are swirling because the bank has taken pains to paint itself as the least affected of the big financial firms by the foreclosure-process probes that have sprung up all over the country.
Bank of America (BAC), the biggest U.S. bank, has seen its shares tumble to a 52-week low amid questions about the high level of bad loans on its books and how it has handled foreclosures in the past. JPMorgan Chase (JPM) is widely seen as better run and therefore less exposed than BofA, but CEO Jamie Dimon conceded on the bank's earnings call this month that Chase may have to pay some penalties to settle state inquiries.
Unlike many of its rivals, Wells hasn't stopped foreclosures at any point.
"We are confident that our practices, procedures and documentation for both foreclosures and mortgage securitizations are sound and accurate," CEO John Stumpf said in a statement this week.
But the ProPublica report is noteworthy because Savery isn't the only Wells employee to have resorted to this subterfuge. The Washington Post reported this week that a vice president, Xee Moua, "said she signed as many as 500 documents in the span of two hours attesting to the accuracy of foreclosure paperwork."
Moua isn't a speed reader. She concedes she "neither verified the information nor understood the statements she was signing," the Post reports.
But even more sinister from Wells Fargo's point of view, an employee with a pretty decent job title appears to have been oblivious of her duties to the court, which suggests the bank's foreclosure processing training has been something short of a complete success.
"Checking the numbers was 'not part of my job description,'" she contended, the Post reports.
Of course, just because two so-called robo-signers have been spotted doesn't say Wells has bigger problems. Indeed, the company's statement on the foreclosure issue this week acknowledges it has made mistakes.
As always, as a standard business practice, we continually review and reinforce our policies and procedures. This includes conducting additional reviews before loans go to foreclosure sale. If we find an error or if an improvement is needed, we take action.
The question for investors is how many errors it might take to eventually undermine that claim.