A mortgage trustee was left without an appellate brief defending a foreclosure judgment after its outside attorneys submitted four nonexistent court decisions found through Google’s generative AI search tool.
The District of Columbia Court of Appeals struck the filing submitted for Deutsche Bank National Trust Company, acting as trustee for Soundview Home Loan Trust 2006-OPT3, a residential mortgage-backed securities trust.
The court’s Sept. 3 published order did not overturn the foreclosure judgment or accuse Deutsche Bank of misconduct. But it illustrates how deficient AI controls at an outside foreclosure firm can create litigation risk for the mortgage company, trust, or investor represented in court.
“What began as a routine appeal has become a cautionary tale about the misuse of artificial intelligence,” the three-judge panel wrote.
Four Cases Did Not Exist
The appeal stems from a D.C. Superior Court order granting Deutsche Bank’s motion for judgment on the pleadings in a judicial foreclosure action against homeowner Barry Douglas.
Douglas, who is representing himself, appealed, requiring Deutsche Bank to defend the foreclosure judgment before the District of Columbia Court of Appeals.
While reviewing the parties’ briefs, the court found multiple authorities in Deutsche Bank’s filing that it could not locate or verify. It ordered the trustee to explain why the brief should not be struck for citing potentially nonexistent, AI-generated cases.
Attorney Loishirl W. Hall confirmed that four cited cases did not exist. According to the order, Hall acknowledged using Google’s generative AI search tool to locate case authority without verifying the four citations before filing.
Hall apologized and subsequently checked the remaining citations. She told the court it was the first appellate brief she had filed and has since left McCabe, Weisberg & Conway LLC, Deutsche Bank’s outside counsel in the case.
Two other attorneys were listed on the brief. The firm told the court it was unaware of Hall’s actions when it submitted the filing.
McCabe, Weisberg & Conway said its policies prohibit employees from using AI to draft legal correspondence or documents and require citations to be verified regardless of how they were obtained. It acknowledged that it should have reviewed the brief more thoroughly and asked the court to accept it after deleting the false citations.
The court rejected that request and struck the entire brief.
Although Hall accepted responsibility as the submitting attorney, the panel said every firm attorney who signed the brief bore some responsibility for its contents.
Senior Judge Stephen Glickman clarified in a separate concurrence that this does not require every attorney listed on a brief to check every citation personally. Firms may establish other reasonable verification procedures. The court found that the necessary review did not occur here.
Impact On Foreclosure Appeal Remains Unclear
The appellate court has not ruled on Douglas’ challenge to the foreclosure judgment. Its order addressed the defective brief, not Deutsche Bank’s right to enforce the mortgage.
The court did not dismiss the foreclosure case or reverse the judgment in the trustee’s favor. It also did not state whether Deutsche Bank may file a replacement brief.
The matter was referred to the Office of Disciplinary Counsel for any investigation it considers appropriate. A referral is not a finding of professional misconduct. The court also asked its Rules Committee to consider whether its sanctions authority should be clarified.
Glickman said the record did not establish intentional, knowing, reckless, or bad-faith conduct by Hall or the firm. Based on the available record, he characterized the conduct as negligent or grossly negligent.
Why It Matters
Mortgage servicers routinely manage foreclosure litigation for investors and securitized trusts through outside law firms. A failure at one of those firms can delay a proceeding, increase legal expenses, or weaken the trust’s ability to defend a favorable foreclosure ruling.
Mortgage companies evaluating AI risk should look beyond their own employees and technology vendors. Foreclosure counsel, bankruptcy firms, title providers, and other outside professionals may use AI while performing work that directly affects lien enforcement, investor obligations, and litigation outcomes.
Relevant controls may include:
- Disclosing whether generative AI is used on mortgage-related matters;
- Independently checking AI-assisted research and citations;
- Requiring supervisory review before court filings;
- Reporting AI-related errors promptly; and
- Assigning responsibility for resulting costs and delays.
The law firm said it already had an AI policy. The filing nevertheless reached an appellate court with four nonexistent cases. For mortgage businesses, that is the underlying warning: a written policy is not an effective control unless someone verifies that it is being followed.
NMP previously examined AI’s growing role in servicing in The Algorithmic Servicer and third-party oversight in AI Vendor Audits: Why Lenders Need Them And What They Should Cover.
A similar problem surfaced on the other side of a foreclosure dispute in January. A New York appellate court imposed $10,000 in combined sanctions after a borrower and his attorney submitted at least 23 fabricated cases across five filings.
Taken together, the cases show that AI-generated errors can disrupt foreclosure litigation regardless of which party introduces them. For mortgage servicers, trustees, and investors, the exposure extends to every outside professional whose work can affect the enforcement of a mortgage.
