Florida AG releases three more sworn statements in foreclosure probe

Florida Attorney General Bill McCollum, whose office is investigating foreclosure practices in his state, released three more sworn statements from former employees at law firms detailing alleged improprieties in the way foreclosure cases were being handled.

Attorneys at the Law Office of Marshall Watson allegedly signed affidavits without the notary present, according to Jessica Cabrera, a lawyer there from December 2007 to July of 2010. Attorneys at the firm would allegedly sign the documents and send stacks to notaries afterward.

This process changed eight months ago, according Cabrera, when the firm realized there was a problem and employed roughly 50 notaries to work in-house.

However, when asked if there were any improprieties going on at the office while she was there, Cabrera responded: "No, I was not (aware)."

Holly Skolnick, the attorney representing Watson, said they are cooperating fully with the investigation.

All 50 state AG offices, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and other state regulators are also participating in the investigations of what have been commonly called "document mills" in the foreclosure industry.

With respect to the Law Offices of David J. Stern, an office manager was signing more than 1,000 affidavits per day, according to the statements.

Cheryl Salmons, office manager for the foreclosure department at the Law Office of David J. Stern, allegedly signed 500 in the morning and another 500 in the afternoon, according to testimony from her assistant Kelly Scott, who worked at the firm from January 2008 until she left in February 2009.

Scott said the stacks of paperwork were laid out on a conference table and signed by Salmons and other employees she allegedly taught how to sign her name. Paralegals allegedly notarized the documents before and swapped the paperwork for witness signatures afterward.

"Cheryl would give certain paralegals rights to sign her name, because most of the time she was very tired, exhausted from signing her name numerous times per day," Scott said in the testimony.

Jeffrey Tew, a lawyer representing Stern, has said in previous published reports that it is unfair to be circulating such statements in the press, and said his client hasn't been given the opportunity to question the statements.

The AG office took a statement from Mary Cordova, who worked for G&Z Processing Service, which processed loans for the Law Office of David J. Stern. She worked there just two months and said she was forced to process 22 files every eight-hour shift. When the company asked her to sign a confidentiality agreement, she resigned.

The state's AG office alleged the firm fabricated documents to speed up foreclosures. A Florida judge denied a motion to quash the case on Oct. 14, but Tew, said the firm would appeal the ruling.

Bank of America (BAC: 11.80 0.00%), which suspended foreclosures nationwide as part of its review, announced Monday that it would begin resubmitting corrected affidavits Oct. 25. Ally Financial (GJM: 22.12 0.00%) is also submitting remediated affidavits as it reviews documentation across the country along with JPMorgan Chase (JPM: 37.69 0.00%).

While politicians and some AG offices have asked for a national moratorium, market players and even the White House have acknowledged working through the foreclosures as quickly as possible is key to speeding up the housing recovery.

Fannie, Freddie and Citigroup (C: 4.06 0.00%) stopped referring foreclosure cases to Stern.

Neither Stern nor G&Z returned requests for comment.

Write to Jon Prior.