The whole robo-signing fiasco is causing problems not just for the people who were fraudulently foreclosed on by lenders, but even for people who never missed a payment and paid off their loans.

image Reuters has the story, but here are some snippets. First, background on robo-signing:

Depositions from “affidavit slaves” depict a surreal, assembly-line world in which the banks and their partner firms hired hair stylists, fast-food kids and Wal-Mart floor workers, paying them $10 an hour, to pose as bank vice presidents, assistant secretaries and corporate attorneys.

These “robosigners” became a national sensation in the fall of 2010 when it was revealed that they faked titles, forged documents and backdated affidavits so they could make up for the bypassed procedures and foreclose on properties.

The story tells of people who have paid off their mortgages only to find that shoddy bank paperwork has them facing ruined credit and nasty repo men.

In July 2009, Roy and Sheila Bowers refinanced the mortgage on their suburban ranch home in Topeka, Kansas. The couple wanted to take advantage of the low interest rates that were all the rage at the time. [...]

But what the Bowers never imagined was that their old loan, the one Wells Fargo told them was paid off, would resurrect itself, trashing their credit report, scotching their son’s student loans and throwing the whole family into foreclosure. All, they say, even though they didn’t miss a single mortgage payment.

(Now Wells Fargo is claiming that the Bowerses have two mortgages — the old one and the refinanced one.)

Read the whole, sordid tale over at Reuters.