New York's New Rule: Lawyers Must Truly Certify Foreclosure Documents

The New York Law Journal reports that New York state has a new rule for foreclosures that will force a complete overhaul of the now-standard practices of the foreclosure business: Attorneys will have to certify under penalty of perjury that they have personally reviewed all the key documents -- in all pending and new cases -- and that they have spoken directly with their clients, the foreclosing financial institutions.

The business model of companies such as Lender Processing Services (LPS), which is involved in many foreclosures, does not currently involve such attorney-bank communication as a matter of course, and with robo-signed documents in so many files, much will have to change to get attorneys access to -- and time to review -- the underlying documents.

New York State Chief Judge Johnathan Lippman tells DailyFinance: "We're aware of what's going on, we don't live in a vaccum, and with all the reveleations coming from the lenders themselves of systemic problems, the flawed notarizations, the robo-signing, we feel we can't close our eyes to this. We're turning to the lawyers and saying talk to your clients, talk to people with knowledge of the proceeding and make sure they are credible. We are acting to preserve the integrity of the court system."

So, for the nearly 78,000 foreclosures pending in New York, business as usual can no longer be done, and foreclosures will grind to a halt until new processes are in place, ones that attorneys are willing to bet their licenses on.

And other states can't be far behind. How many and which ones remains to be seen. Each state legal system has its own procedures for rule-making, but the damage to court processes and the rule of law posed by the robo-signing scandal is just too great for New York to be the only state court to take steps to defend itself.