"In the 23 states where Ally froze evictions, the courts require the person signing off on foreclosures on behalf of a lender to have 'personal knowledge' of the documents involved in the case, Ally spokesman James Olecki said Thursday. Once the company realized that its document signers did not, it had to replace the 'defective affidavits' with new ones.
Olecki said this process should be completed by the end of the year. He declined to comment further about ongoing foreclosure cases in the rest of the states.
In Maryland, Virginia, the District and 25 other states in which lenders do not need a court order, homeowners challenging foreclosure proceedings face an uphill battle. In those places, a bank needs only to file papers with a local court official after giving a borrower sufficient notice.
It's up to the homeowner to sue the lender to stop the process.
It remains unclear whether suing on the basis of faulty paperwork - call it the 'robo-signer' defense - could help borrowers keep their homes, especially if they failed to keep up with their monthly payments."
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