Nevada’s Attorney General announced on Thursday that two people have been indicted for allegedly being involved in a “massive” robo-signing mortgage scheme. A spokeswoman for Attorney General Catherine Masto said she believed the indictments will represent the first criminal charges filed in association with robo-signing, an illegal act of falsifying foreclosure documents.
Two Individuals Face Dozens of Robo-Signing Charges
California residents, Gary Trafford and Gerri Sheppard, allegedly supervised dozens of robo-signings in Nevada between 2005 and 2008, when the housing market bubble hit its peak.
During those years, they worked for mortgage servicing firm Lender Processing Services (LPS), a firm which processes loans for more than 50 percent of all U.S. mortgages. The firm has also been subpoenaed by attorneys in California and Illinois in connection with alleged robo-signing.
In a statement, Nevada Deputy Attorney General John Kelleher said the grand jury found probable cause that a robo-signing scheme initiated by the two individuals resulted in the filing of tens of thousands of fraudulent documents.
The possible punishment for Trafford and Sheppard has not yet been disclosed. The spokeswoman for the Nevada attorney general declined to comment on whether it has additional plans to expand the investigation or seek more indictments.
Robo-Signing Crippled the Housing Market
Robo-signing is an act that came to light last year when it was discovered that major mortgage servicers had been completing the foreclosure process without first presenting notary public-verified sworn affidavits to courts as required by their states. Instead, they issued foreclosures with falsified, computer-generated signatures.
The illegal act is believed to have been responsible for thousands of wrongful foreclosures nationwide over the past few years. In fact, experts say the act has crippled the already troubled housing market by creating a backlog of foreclosures that now could take decades to clear out.
Lawmakers have held the mortgage servicers responsible, in some cases, requiring them to compensate homeowners if they were wrongfully evicted from their homes. Until now, no individuals had been held criminally responsible for the act.