Exclusive: Afghan officials met key Taliban figure in Pakistan

KABUL/ISLAMABAD (Reuters) - Afghan officials have held secret talks with the Taliban's former second in command who is in detention in Pakistan in a move which could help rekindle stalled peace talks with the insurgents, according to senior officials from both countries.

Afghan officials have often seen Pakistan as a reluctant partner in attempts to broker talks with the Taliban but its decision to grant access to Mullah Abdul Ghani Baradar may signal Islamabad's willingness to play a more active role.

Rangin Spanta, the national security adviser to Afghan President Hamid Karzai and an architect of peace-building efforts, said an Afghan delegation had met Baradar in Pakistan two months ago.

Baradar has been in detention since he was captured in a joint operation by the CIA and Pakistani intelligence agents in the Pakistani city of Karachi in 2010.

"We have met Mullah Baradar," Spanta told Reuters in Kabul. "Our delegation has spoken to him to know his view on peace talks."

Afghan officials have publicly been demanding access to Baradar, the Taliban's top military commander until he was captured, but Spanta's revelation shows preliminary contact has already been made.

Rehman Malik, Pakistan's interior minister, also said that Pakistan had granted Afghan officials access to Baradar.

"They had access at the required and appropriate level," Malik told Reuters.

"We are fully cooperating with Afghanistan and whatever they are asking for the peace process, for developing peace in Afghanistan. We are giving every kind of help."

Pakistan is seen as crucial to stability in Afghanistan as most foreign combat troops look to leave the country in 2014, given close political and economic ties and because militant sanctuaries straddle the mountainous border.

Baradar was the main day-to-day commander responsible for leading the Taliban campaign against U.S. and NATO troops, plotting suicide bombings and other attacks.

He was the right-hand man to reclusive Taliban leader Mullah Mohammed Omar, who gave him the nickname Baradar (brother), providing him with great influence and prestige in Taliban circles.

CRITICAL TO RECONCILIATION?

Afghan officials hope Baradar could play a key role in any negotiations to end the war, acting as a go-between with Taliban leaders including Omar.

Afghan and U.S. officials have publicly acknowledged little success in efforts to re-start peace talks, which the Taliban suspended after accusing U.S. officials of failing to honor confidence-building promises.

That setback refocused attention on nascent efforts by the Afghan government to open its own channels with insurgent intermediaries, despite the fact the Taliban publicly say they will not talk to what they deem an illegitimate "puppet" government.

Karzai, at a recent donors' meeting in Japan, also appealed to Germany to act as a go-between to revive talks, in a second track to contacts with Taliban leaders in Pakistan.

A Western official said Pakistan's decision to grant access to Baradar would bolster hopes of greater collaboration between the two countries, but the Afghan government would only be fully satisfied if Baradar was repatriated to Kabul.

"It's a step in the right direction, but there's still a number of steps to go," the official said.

Although Afghan officials may be pinning hopes on Baradar, it is unclear what influence he may have over a complex insurgency after spending years in detention.

Pakistan and Afghanistan agreed last month to resume regular talks on Afghanistan's peace process, with the new Pakistani prime minister promising to help arrange meetings between Afghan and Taliban representatives.

Afghanistan is known to want access to Taliban leaders belonging to the so-called Quetta Shura, or council, named after the Pakistani city where they are believed to be based.

Kabul believes they would be the decision-makers in any substantive negotiations aimed at ending a war in its eleventh year.

Pakistan has consistently denied giving sanctuary to insurgents and says no Taliban leaders are in Quetta.

The Afghan government has established some contacts with the Taliban, who have made a strong comeback after being toppled in 2001, but there are no signs that full-fledged peace talks will happen any time soon.

U.S. diplomats have also been seeking to broaden exploratory talks that began clandestinely in Germany in late 2010 after the Taliban offered to open a representative office in the Gulf emirate of Qatar, prompting demands for inclusion from Kabul.

(Additional reporting by Matthew Green in Islamabad and Rob Taylor in KABUL; Editing by Robert Birsel)

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Exclusive: Mortgage problems? Turn your house into a billboard (Reuters)

BUENA PARK, California (Reuters) – When they saw the house on El Dorado Drive in this Los Angeles suburb being painted a startling orange and green and giant billboards hung on the outside, Scott and Beth Hostetler's neighbors were initially angry and confused. Some even considered calling the police.

But what they witnessed on Friday was not an offensive redecoration decision by the Hostetlers, but rather the debut of one of the more unusual schemes to arise from the housing crisis. In return for allowing the front of their four-bedroom house to become a garish advertisement, the Hostetlers are getting their nearly $2,000 monthly mortgage paid by the marketing company behind the project, Brainiacs From Mars.

In a residential neighborhood without heavy traffic, cars passing by the house slowed and drivers gawked at the vivid colors and a giant Brainiacs From Mars billboard.

Romeo Mendoza, the company's founder and CEO, told Reuters that his ultimate goal is to turn 1,000 homes across the United States into giant advertisements for his marketing firm.

And in each case struggling homeowners will get their mortgage paid, for up to a year.

"If we roll it out to scale and impact the foreclosure crisis, that would be amazing," Mendoza, 42, said.

Mendoza said he chose the Hostetlers because they are nice people and he wants to choose the most deserving cases rather than homes on the busiest streets.

Since he advertised the scheme on his website in April 2011, Mendoza says he has had 38,000 applications, from as far afield as Russia and Japan.

The Hostetlers, who are both deaf, were one of those applications and were informed three months ago that their home had been chosen to launch the scheme.

There are a number of issues that could prevent the idea from gaining traction, namely zoning laws and other city codes that limit where advertising can be placed and sometimes regulate other aspects of a home's appearance.

But Mendoza says the idea could help struggling homeowners who face being evicted from their homes through foreclosure, although the Hostetlers say they are going to use the money to pay down credit card debt.

Most of the 38,000 applicants have come from California, Nevada and Florida - the three U.S. states hardest hit by the foreclosure crisis triggered by the collapse in housing prices after the 2008 financial crash.

GRAFFITI OR GODSEND?

In southern California 44 per cent of homeowners are "underwater," owing more on their mortgages than their homes are worth. In Buena Park, about one in every 270 homes has been foreclosed upon.

"The response has been overwhelming," Mendoza says. "People are hurting, and struggling to stay in their homes. If we can help some of them, that would be great."

Mendoza's plan is to advertise his company's name and its social media marketing tools on the front of people's homes. In return, he hopes the quirkiness of the scheme will convince companies to hire Brainiacs From Mars to run their advertising campaigns.

He says he is already negotiating deals with some big firms. The payments to homeowners for the initial experiments are being funded by profits from some of his company's other projects.

The reaction of the Buena Park city council, and some of the Hostetlers' neighbors, suggests that Mendoza could face a bumpy ride.

The Hostetlers' neighbors have been told that the house will only be a giant advertisement for a month. In fact Mr. Hostetler says he would like it to stay that way for six months.

Neighbor Vivian Largent said: "If it's for a month, I'm ok with it. But no longer."

Echoing that sentiment, another neighbor, 80-year-old Bob Pancoast, said: "All the neighbors were a little upset at first. We thought they had gone off their rocker. But I guess it's a good idea for them."

Mendoza said he had checked and that there are no restrictions in Buena Park on the colors homeowners can paint their houses. "They can paint them multi-colors if they like," Mendoza said.

Fred Smith, who sits on the Buena Park city council, was surprised when told about the scheme - and not at all happy.

The color scheme was fine, he said. But the advertisements were another matter.

"This does not follow with the city codes," he said. "They are going to be in trouble. They need to go someplace else."

Charles Mclaughlin, a finance expert in the housing industry, said: "I don't think the program will be a success. It will be akin to graffiti - that's how people are going to look at it. They are going to run into zoning problems everywhere."

Mendoza said: "There are definitely zoning issues in some cities, and we realize that.

"But we have really hit a nerve, and we can't let that stop us. Once people start seeing how it works, once they get it, the moment they realize it is paying people's mortgages, they are always on our side, because of this economy."

(Editing by Cynthia Osterman)

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Exclusive: Mortgage deal would give states enforcement clout (Reuters)

(Reuters) – A proposed settlement to resolve mortgage abuses by top U.S. banks will give states broad authority to punish firms that mistreat borrowers in the future, according to documents seen by Reuters on Wednesday.

Under the settlement, which states are currently reviewing to decide whether they will join, the states and a separate "monitoring committee" will have the authority to go to court to enforce the terms and seek penalties of up to $5 million per violation.

A strong enforcement mechanism could help the states and the Obama administration sell the deal to the public, after left-leaning activist groups have questioned whether the negotiations were too lenient on the banks.

Negotiations between state and federal officials to resolve allegations of misconduct in servicing home loans have stretched into their second year.

The delay is partly due to some states trying to extract a bigger settlement from the banks and to reserve their ability to file more mortgage-related suits in the future.

However, the deal now looks imminent.

States have just a few more days to make a decision on whether they will sign on. And U.S. Housing and Urban Development Secretary Shaun Donovan said during a White House briefing on Wednesday that a final legal settlement will be reached "in the coming days."

The settlement, expected to be filed as a consent judgment in federal court in Washington, D.C., will last for 3-1/2 years, according to documents laying out the pending deal's enforcement terms.

Joseph Smith, the banking commissioner in North Carolina, is expected to serve as the monitor on the settlement, people familiar with the matter told Reuters on Monday.

In exchange for up to $25 billion, much in the form of cutting mortgage debt for distressed homeowners, the banks will resolve state and federal lawsuits about servicing misconduct and faulty foreclosures, and some lawsuits about how they made the loans.

Banks have been accused of robo-signing documents and other sloppy paperwork in unlawfully rushing to deal with a flood of foreclosures triggered by the 2007-2009 financial crisis.

The core group of banks involved in settlement talks are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup Inc. and Ally Financial Inc.

The final value of the settlement will depend on which states it includes, and could drop sharply if states like California, one of the hardest hit by the foreclosure crisis, do not join.

On Wednesday, Oregon Attorney General John Kroger said his state will join the settlement. He said Oregon can expect to receive around $30 million from the settlement, and its distressed homeowners can expect around $100 million to $200 million in relief.

The mortgage settlement is just one piece of a larger plan that the Obama administration hopes will get relief to home buyers and help boost the economy. Also on Wednesday, the Obama administration introduced a $5 billion to $10 billion package to help homeowners refinance their loans.

GIVING THE STATES SOME MUSCLE

Some states have raised concerns that banks have not adequately followed through on prior settlements, a concern that has pushed government negotiators to establish more forceful enforcement mechanisms in this deal than have been used in the past.

"I'd like to see very detailed, specific regulations on mortgage servicers and what they can and cannot do," said Max Gardner, a nationally known consumer bankruptcy attorney in Shelby, North Carolina. "Not just the proverbial 'we will obey the law from now on.'"

The enforcement terms mark progress in states' ability to directly monitor mortgage servicing at national banks. For decades, big banks fought state efforts to enforce consumer protection laws by arguing that national banking laws pre-empted their authority.

Under the settlement, the banks will set up internal quality control groups to assess their mortgage servicing units' compliance with the terms of the agreement, and turn over quarterly reports to the monitor about servicing complaints.

If the monitor concludes the group "did not correctly implement" the reviews, the monitor can have a third party review the work.

If the monitor finds information that a servicer "may be engaged in a pattern of noncompliance," he can undertake a more thorough review, and impose even tougher standards.

Servicer compliance will be measured through detailed information about unlawful foreclosure sales and incorrect denials of loan modifications, according to the documents.

If the servicer continues to violate any of the terms, any of the states or a monitoring committee can go to court and seek penalties of up to $1 million for the first "uncured" violation and up to $5 million for a second.

Servicers will pick up the tab for the monitor, the documents said.

The monitoring committee is comprised of representatives of state attorneys general, the U.S. Justice Department, and the U.S. Department of Housing and Urban Development, who will review the work of the monitor.

The document says that all the terms are subject to approval by federal banking regulators.

(Reporting By Rick Rothacker in Charlotte and Aruna Viswanatha in Washington, D.C.; Editing by Tim Dobbyn)

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Exclusive: Angelides to lead distressed mortgage firm (Reuters)

By Matthew Goldstein and Jennifer Ablan Matthew Goldstein And Jennifer Ablan – Fri Jan 13, 3:32 pm ET

New York (Reuters) – Phil Angelides, formerly the chairman of a federal commission who led investigations into why the financial markets collapsed, is heading an investment group that hopes to "do a good thing" for America while turning a profit from the wreckage of the housing market.

The startup company, of which Angelides is executive chairman, seeks to raise money from investors to purchase troubled mortgages from banks and other financial institutions in order to help keep homeowners from being foreclosed upon, according to a January 4 letter reviewed by Reuters.

The company, Mortgage Resolution Partners, claims its strategy of using "legal and political leverage" to acquire the loans could generate a 20 percent annual return for investors. The company intends to purchase mortgages at a steep discount and re-work them to enable the homeowners to continue making payments, with the firm collecting the proceeds.

"We just might do a good thing for America, and along the way get a great return on investment," says the letter to prospective investors. "If our hopes do not pan out, the amount wagered should be a deductible loss."

In the letter, the mortgage company refers to its political connections as its "secret formula."

Angelides, a former California state treasurer, Democratic politician and land developer, was head of the Financial Crisis Inquiry Commission until last February.

Planning for the Mortgage Resolution Partners began last summer, less than five months after the Commission wrapped up its work in Washington, D.C. In January 2011, the Commission issued a 662-page report that highlighted Wall Street's role in the collapse of the U.S. housing market. ( http://fcic-static.law.stanford.edu/cdn_media/fcic-reports/fcic_final_report_full.pdf )

Angelides did not respond to an email seeking comment.

Emily Lenzner, a spokeswoman for Mortgage Resolution Partners, said the mortgage crisis was affecting millions of families in California and beyond, having a devastating impact on communities and the economy. She said political initiatives had come up short and "Mortgage Resolution Partners is exploring business and public policy solutions to this critical matter."

In a September interview with Bloomberg television on the housing crisis, Angelides said: "The banks unfortunately aren't doing enough to fix the housing crisis." He added: "I think we need to be much more forceful now about modifications. There are millions of people who can stay in their homes if they have principal reductions."

His move into housing comes at a time when hedge funds, private equity firms and other deep-pocketed investors are looking to scoop up foreclosed homes and earn money by renting them out. The Federal Housing Finance Agency, which regulated Fannie Mae and Freddie Mac, recently received proposals from hundreds of investment groups interested in acquiring and renting out single-family homes federal agencies have foreclosed on.

"The big question is, 'How can he possibly jump to the front of the line when everybody's been jockeying for this and to get to this feeding trough. Perhaps because he knows where the front of the line is?" Laus Abdo, executive director at TriArchic Advisors, a Las Vegas real estate advisory firm which has been focusing on rentals of single-family homes acquired through foreclosure.

Mortgage Resolution Partners is starting off small, aiming to raise about $6 million to study the feasibility of its plan, which mainly focus on acquiring home loans in distressed communities in California.

Most of the group's founding members have deep ties to California and have either political or finance backgrounds. The letter lists former San Francisco Mayor Willie Brown Jr. and Putnam Lovell Securities founder Donald Putnam as early backers of the company.

Putnam, who now heads private equity and investment advisory shop Grail Partners LLC, declined to comment, beyond saying the group "is trying to think of ways to cut through the Gordian Knot of the mortgage crisis." Before Grail, Putnam was involved in numerous transactions including Allianz Group's acquisition of PIMCO Advisors LP and Deutsche Bank AG's acquisition of Zurich Scudder Investment.

Gordian Knot, a reference to a legend involving Alexander the Great, is often a metaphor for an intractable problem and appears to be the inspiration for the investment vehicle that controls Mortgage Resolution Partners - Gordian Sword LLC.

In November, according to the January 4 letter to "potential investor members," the founders of Gordian Sword and at least two dozen other people met at Cavallo Point in Sausalito, California, a posh estate in Golden Gate National Park, "to hammer out a business plan and chart a course through 2012."

But the letter, which asks potential investors to sign a non-disclosure agreement before receiving any further information, is sparse on details. It says the company will use "computer models and other techniques" to determine the best price for a so-called underwater mortgage - a loan on which a borrower owes more than a house is worth. The goal is to acquire loans at a discount and write down the debt to a point where a borrower can continue to make payments.

A good deal of the success of the program rests on Mortgage Resolution Partners' "secret formula," which the letter describes as its leverage in "California politics" and an executive chairman in Angelides, "who will be front-line center stage nationally."

The idea of investment groups buying distressed mortgages and writing down the principal and attempting to make money by keeping homeowners current on their new mortgages isn't totally new. A handful of other investment funds are trying that, including Selene Residential Mortgage Opportunity Fund, founded by mortgage-backed securities pioneer Lewis Ranieri.

But the more common approach is for investors to raise money to buy foreclosed homes and rent them out.

Lenzner, the spokeswoman for Mortgage Resolution Partners, said since the group has just been launched "it's premature to determine" the firm's final approach to the mortgage problem because it is "still in the research and development stage."

(Reporting by Matthew Goldstein and Jennifer Ablan; editing by Claudia Parsons and Edward Tobin)

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Exclusive: Facing criticism, MERS cuts role in foreclosures (Reuters)

By Scot J. Paltrow Scot J. Paltrow – Wed Jul 27, 4:52 pm ET

NEW YORK (Reuters) – MERS, the electronic mortgage registry that faces multiple investigations for its role in thousands of problematic foreclosure cases, changed its rules to lower its profile in court-supervised foreclosures.

MERS, a unit of Merscorp Inc. of Reston, Virginia, owns the computerized registry, Mortgage Electronic Registration Systems. Mortgage loan giants Fannie Mae and Freddie Mac and several of the largest U.S. banks established MERS in 1995 to circumvent the costly and cumbersome process of transferring ownership of mortgages and recording the changes with county clerks.

In rule changes announced to MERS members on July 21, the company forbade members to file any more foreclosure actions in MERS's name.

It also required mortgage servicers to obtain mortgage assignments and record them with county clerks before beginning foreclosures.

Mortgage-loan servicers perform routine duties for the investment trusts that own pools of mortgages, including collecting mortgage payments and, when necessary, filing foreclosures.

Although these trusts are legally required to own the mortgages when they file to foreclose, the servicers in many cases did not obtain documents known as assignments on their behalf until weeks or months after launching a foreclosure action in court, a recent Reuters Special Report found. (http://link.reuters.com/kyb72s)

Since the collapse of the housing boom, many foreclosure cases were filed in MERS's name, even though the registry doesn't really own either the mortgage or the promissory note, the document which states the terms of the mortgage loan.

MERS's role in foreclosure cases has made it a lightning rod in recent months in court decisions which have held that loan servicers' use of the registry violates basic real estate and mortgage laws.

In the last week, state attorneys general in Massachusetts and Delaware have announced investigations of MERS, and several other states have broader inquiries into foreclosure practices that include MERS.

It is unclear how much the rule changes will help MERS with its legal problems.

Under the new rules, servicers are required to stop filing foreclosures in MERS's name, but MERS's role in foreclosures won't actually be eliminated. The servicers will continue to obtain the needed mortgage assignments from MERS. In past cases examined by Reuters, such assignments have included ones of questionable legitimacy, such as mortgages owned by now-defunct lenders.

O. Max Gardner III, a North Carolina lawyer who is specialist in foreclosure actions in bankruptcy courts, said the change will have the effect of making MERS's role in assigning mortgages invisible in court.

The assignments will still come from MERS, but "they just won't be in the court files any more," he said.

MERS spokeswoman Janice Smith said the new rules make mandatory a trend that already was under way.

She noted that Fannie Mae, Freddie Mac and several large banks already had stopped filing foreclosures in MERS name. Smith said the change would avoid confusing homeowners facing foreclosure by eliminating MERS, a company they had never heard of, from court documents.

She also said that MERS' s original purpose was to keep track of changes in servicers and mortgage ownership. "Foreclosure really was not central to MERS's core business," she said, adding that MERS received no income from foreclosures.

Mortgage-law specialists say that lenders and servicers for a long time relied heavily on bringing foreclosures in MERS's name. This helped make possible foreclosures that otherwise might not have taken place because the necessary original documents were missing.

MERS says that it is the holder of record of 32 million, or 60 per cent, of U.S. mortgages. But it has only a handful of employees. Instead, it has designated some 20,000 employees of banks and other servicers as MERS "officers."

Some courts and homeowners' lawyers have criticized this system because in effect it enables servicers to assign mortgages to themselves whenever they needed one to foreclose.

The rule change also comes amid a growing movement against MERS among county clerks around the U.S. They have been pressing state attorneys general and local prosecutors to investigate MERS for allegedly failing to record documents with them and pay the associated filing fees. The rule change, by requiring servicers to record mortgage assignments sooner and pay recording fees, will partly address the clerks' concerns.

(Editing by Michael Williams)

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AP Exclusive: Mortgage 'robo-signing' goes on (AP)

By MICHELLE CONLIN and PALLAVI GOGOI, AP Business Writers Michelle Conlin And Pallavi Gogoi, Ap Business Writers – 2 hrs 50 mins ago

Mortgage industry employees are still signing documents they haven't read and using fake signatures more than eight months after big banks and mortgage companies promised to stop the illegal practices that led to a nationwide halt of home foreclosures.

County officials in at least three states say they have received thousands of mortgage documents with questionable signatures since last fall, suggesting that the practices, known collectively as "robo-signing," remain widespread in the industry.

The documents have come from several companies that process mortgage paperwork, and have been filed on behalf of several major banks. One name, "Linda Green," was signed almost two dozen different ways.

Lenders say they are working with regulators to fix the problem but cannot explain why it has persisted.

Last fall, the nation's largest banks and mortgage lenders, including JPMorgan Chase, Wells Fargo, Bank of America and an arm of Goldman Sachs, suspended foreclosures while they investigated how corners were cut to keep pace with the crush of foreclosure paperwork.

Since then, suspect paperwork has been filed not only with foreclosures, but also with new purchases and refinancings. Critics say the new findings point to a systemic problem with the paperwork involved in home mortgages and titles. And they say it shows that banks and mortgage processors haven't acted aggressively enough to put an end to widespread document fraud in the mortgage industry.

"Robo-signing is not even close to over," says Curtis Hertel, the recorder of deeds in Ingham County, Mich., which includes Lansing. "It's still an epidemic."

In Essex County, Mass., the office that handles property deeds has received almost 1,300 documents since October with the signature of "Linda Green," but in 22 different handwriting styles and with many different titles.

Linda Green worked for a company called DocX that processed mortgage paperwork and was shut down in the spring of 2010. County officials say they believe Green hasn't worked in the industry since. Why her signature remains in use is not clear.

"My office is a crime scene," says John O'Brien, the registrar of deeds in Essex County, which is north of Boston and includes the city of Salem.

In Guilford County, N.C., the office that records deeds says it received 456 documents with suspect signatures from Oct. 1, 2010, through June 30. The documents, mortgage assignments and certificates of satisfaction, transfer loans from one bank to another or certify a loan has been paid off.

Suspect signatures on the paperwork include 290 signed by Bryan Bly and 155 by Crystal Moore. In the mortgage investigations last fall, both admitted signing their names to mortgage documents without having read them. Neither was charged with a crime.

And in Michigan, a fraud investigator who works on behalf of homeowners says he has uncovered documents filed this year bearing the purported signature of Marshall Isaacs, an attorney with foreclosure law firm Orlans Associates. Isaacs' name did not come up in last year's investigations, but county officials across Michigan believe his name is being robo-signed.

O'Brien caused a stir in June at a national convention of county clerks by presenting his findings and encouraging his counterparts to investigate continued robo-signing.

The nation's foreclosure machine almost came to a standstill when the nation's largest banks suspended foreclosures last fall. Part of the problem, banks contended, was that foreclosures became so rampant in 2009 and 2010 that they were overwhelmed with paperwork.

The banks reviewed thousands of foreclosure filings, and where they found problems, they submitted new paperwork to courts handling the cases, with signatures they said were valid. The banks slowly started to resume foreclosures this winter and spring.

The 14 biggest U.S. banks reached a settlement with federal regulators in April in which they promised to clean up their mistakes and pay restitution to homeowners who had been wrongly foreclosed upon. The full amount of the settlement has not been determined. But it will not involve independent mortgage processing firms, the companies that some banks use to handle and file paperwork for mortgages.

So far, no individuals, lenders or paperwork processors have been charged with a crime over the robo-signed signatures found on documents last year. Critics such as April Charney, a Florida homeowner and defense lawyer, called the settlement a farce because no real punishment was meted out, making it easy for lenders and mortgage processors to continue the practice of robo-signing.

Robo-signing refers to a variety of practices. It can mean a qualified executive in the mortgage industry signs a mortgage affidavit document without verifying the information. It can mean someone forges an executive's signature, or a lower-level employee signs his or her own name with a fake title. It can mean failing to comply with notary procedures. In all of these cases, robo-signing involves people signing documents and swearing to their accuracy without verifying any of the information.

Most of the tainted mortgage documents in question last fall were related to homes in foreclosure. But much of the suspect paperwork that has been filed since then is for refinancing or for new purchases by people who are in good standing in the eyes of the bank. In addition, foreclosures are down 30 percent this year from last. Home sales have also fallen. So the new suspect documents come at a time when much less paperwork is streaming through the nation's mortgage machinery.

None of the almost 1,300 suspect Linda Green-signed documents from O'Brien's office, for example, involve foreclosures. And Jeff Thigpen, the register of deeds in North Carolina's Guilford County, says fewer than 40 of the 456 suspect documents filed to his office since October involved foreclosures.

Banks and their partner firms file mortgage documents with county deeds offices to prove that there are no liens on a property, that the bank owns a mortgage or that a bank filing for foreclosure has the authority to do so.

The signature of a qualified bank or mortgage official on these legal documents is supposed to guarantee that this information is accurate. The paper trail ensures a legal chain of title on a property and has been the backbone of U.S. property ownership for more than 300 years.

The county officials say the problem could be even worse than what they're reporting. That's because they are working off lists of known robo-signed names, such as Linda Green and Crystal Moore, that were identified during the investigation that began last fall. Officials suspect that other names on documents they have received since then are also robo-signed.

It is a federal crime to sign someone else's name to a legal document. It is also illegal to sign your name to an affidavit if you have not verified the information you're swearing to. Both are punishable by prison.

In Michigan, the attorney general took the rare step in June of filing criminal subpoenas to out-of-state mortgage processing companies after 23 county registers of deeds filed a criminal complaint with his office over robo-signed documents they say they have received. New York Attorney General Eric Schneiderman's office has said it is conducting a banking probe that could lead to criminal charges against financial executives. The attorneys general of Delaware, California and Illinois are conducting their own probes.

The legal issues are grave, deeds officials across the country say. At worst, legal experts say, the document debacle has opened the property system to legal liability well beyond the nation's foreclosure crisis. So someone buying a home and trying to obtain title insurance might be delayed or denied if robo-signed documents turn up in the property's history. That's because forged signatures call into question who owns mortgages and the properties they are attached to.

"The banks have completely screwed up property records," says L. Randall Wray, an economics professor and senior scholar at the University of Missouri-Kansas City.

In the Massachusetts case, The Associated Press tried to reach Linda Green, whose name was purportedly signed 1,300 times since October. The AP, using a phone number provided by lawyers who have been investigating the documents since last year, reached a person who said she was Linda Green, but not the Linda Green involved in the mortgage investigation.

In the Michigan case, a lawyer for the Orlans Associates law firm, where Isaacs works, denies that Isaacs or the firm has done anything wrong. "People have signatures that change," says Terry Cramer, general counsel for the firm. "We do not engage in `robo-signing' at Orlans."

To combat the stream of suspect filings, O'Brien and Jeff Thigpen, the register of deeds in North Carolina's Guilford County, stopped accepting questionable paperwork June 7. They say they had no choice after complaining to federal and state authorities for months without getting anywhere.

Since then, O'Brien has received nine documents from Bank of America purportedly signed by Linda Burton, another name on authorities' list of known robo-signers. For years, his office has regularly received documents signed with Burton's name but written in such vastly different handwriting that two forensic investigators say it's highly unlikely it all came from the same person.

O'Brien returned the nine Burton documents to Bank of America in mid-June. He told the bank he would not file them unless the bank signed an affidavit certifying the signature and accepting responsibility if the title was called into question down the road. Instead, Bank of America sent new documents with new signatures and new notaries.

A Bank of America spokesman says Burton is an assistant vice president with a subsidiary, ReconTrust. That company handles mortgage paperwork processing for Bank of America.

"She signed the documents on behalf of the bank," spokesman Richard Simon says. The bank says providing the affidavit O'Brien asked for would have been costly and time-consuming. Instead, Simon says Bank of America sent a new set of documents "signed by an authorized associate who Mr. O'Brien wasn't challenging."

The bank didn't respond to questions about why Burton's name has been signed in different ways or why her signature appeared on documents that investigators in at least two states have deemed invalid.

Several attempts by the AP to reach Burton at ReconTrust were unsuccessful.

O'Brien says the bank's actions show "consciousness of guilt." Earlier this year, he hired Marie McDonnell, a mortgage fraud investigator and forensic document analyst, to verify his suspicions about Burton's and other names on suspect paperwork.

She compared valid copies of Burton's signature with the documents O'Brien had received in 2008, 2009 and 2010 and found that Burton's name was fraudulently signed on hundreds of documents.

Most of the documents reviewed by McDonnell were mortgage discharges, which are issued when a home changes hands or is refinanced by a new lender and are supposed to confirm that the previous mortgage has been paid off. Bank of America declined comment on McDonnell's findings.

In Michigan, recorder of deeds Hertel and his counterparts in 23 other counties found numerous suspect signatures on documents filed since the beginning of the year.

In June, their findings led the Michigan attorney general to issue criminal subpoenas to several firms that process mortgages for banks, including Lender Processing Services, the parent company of DocX, where Linda Green worked. On July 6, the CEO of that company, which is also under investigation by the Florida Attorney General's office, resigned, citing health reasons.

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Despite mortgage crisis, home ownership remains cherished American dream (Exclusive to Yahoo! News)

Last week's confirmation that the gross domestic product grew only 1.8 percent in the first quarter came when economists were already busily revising their growth forecasts downward for the rest of this year. A double-dip recession remains unlikely, but this is the weakest recovery since the Great Depression and the first one not being led by housing. The nearly moribund housing sector is, in fact, weighing down the recovery.

The conundrum is very real. On the one hand, the subprime-mortgage crisis and easy money—loans with minimal down payments and scant documentation—brought the U.S. economy to its knees just three years ago. Clearly, changes had to be made to prevent that from recurring. On the other hand, housing-industry leaders now fear that the pendulum is swinging too far the other way, potentially decimating an already battered sector and further stifling the anemic recovery. Although we hear the perennial debate over limiting the homeowners' mortgage-interest deduction, which would hurt the middle and higher end of the housing market, other proposed regulations really terrify the industry. These rules include increased down-payment requirements and loan restrictions for all but those with near-bulletproof credit ratings.

A bipartisan national poll of 2,000 likely voters to be released next week by the National Association of Home Builders makes clear the unique position that homeownership holds in Americans' minds and the delicacy required in dealing with the issue.

The May 3-9 telephone survey, conducted by Celinda Lake and Jonathan Voss of the Democratic polling firm Lake Research Partners and by Neil Newhouse and Robert Blizzard of the GOP outfit Public Opinion Strategies, found that 75 percent of voters believe "that owning a home is the best long-term investment they can make and is worth the risk of ups and downs in the housing market."

Interestingly, a high percentage of people in different financial situations felt this way, including 81 percent of those who own their homes outright, 76 percent with mortgages, 67 percent who are renters, and 65 percent with underwater mortgages. Respondents were also asked whether they would recommend buying a house to a close friend or family member just starting out. Eighty percent of all voters said yes, including 78 percent who had underwater mortgages. Seventy-three percent of the respondents who do not own a home said that their goal is to eventually buy one. Clearly, the decline in home values and economic turmoil have not diluted their dream of homeownership and the aspirational element that makes the notion a core value.

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Some have suggested that the government end tax incentives for homeowners, but the survey suggests a hostile voter reaction to that plan. Told that "since the federal income tax was introduced in 1913, the federal government has used the tax code to encourage home­ownership," respondents were then asked: "In general, do you think it is appropriate and reasonable for the federal government to provide tax incentives to promote homeownership, or do you think it is not a good idea?" Seventy-three percent of all voters thought those incentives should be provided, including 71 percent of Republicans, 68 percent of independents, 79 percent of Democrats, and even 68 percent of those who support the tea party movement.

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When asked about requiring a 20 percent down payment to purchase a home, respondents split evenly, with 49 percent supporting such a threshold and 49 percent opposing it. But among those most likely to be affected, mortgage holders and renters ages 18 to 54, opposition was strong, with 58 percent of younger mortgage holders and 59 percent of younger renters opposed to adding that hurdle to buying a home.

Given this kind of visceral connection to home ownership, it's not surprising that 71 percent of respondents oppose eliminating the mortgage-interest deduction and 63 percent oppose lowering it. Moreover, 58 percent oppose eliminating the deduction for home-equity loans or limiting the deduction for those who earn more than $250,000 a year. Fifty-seven percent of voters said they would be less likely to support a candidate for Congress who wanted to eliminate the mortgage-interest deduction; only 26 percent said they would be more likely to support such a candidate.

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These numbers are pretty much across the board: Sixty-three percent of Republicans, 56 percent of independents, 55 percent of Democrats, 61 percent of tea party supporters, and 58 percent of those voters in congressional districts held by freshman Republicans would be less likely to support a candidate who favored killing the deduction. With the unusually large sample, the pollsters segmented respondents who live in congressional districts that The Cook Political Report rates in the swing category. Fifty-eight percent of that group were less likely to support such a candidate, with 56 percent of those voters in swing Senate states and 54 percent in states that The Washington Post's Chris Cillizza rates as swing presidential states.

The clear message is that owning a home is among the values that Americans most cherish—an important part of the American Dream.

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