States Launch Foreclosure Probe
Officials in all fifty states and the District of Columbia have launched a joint investigation into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners.
The states' attorneys general and bank regulators will examine whether mortgage company employees made false statements or prepared documents improperly.
Alabama initially did not sign on to the investigation. It reversed course after the joint statement was released.
Attorneys general have taken the lead in responding to a nationwide scandal that's called into question the accuracy and legitimacy of documents that lenders relied on to evict people from the homes. Employees of four large lenders have acknowledged in depositions that they signed off on foreclosure documents without reading them.
WWJ and Fox 2 Business Editor Murray Feldman says if there is a silver lining in any of this -- it might buy some time for people who are on the brink of losing their homes. If you're in the foreclosur process, Feldman says the first thing you should do it contact you bank or lender right now, although you may not get an answer quickly as they are overwhelmed.
More on this from Murray Feldman:
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More than 2.5 million homes have been lost to foreclosure since the recession started in December 2007, according to RealtyTrac Inc. Another 3.3 million homes could be lost to foreclosure or distressed sale over the next four years, according to Moody's Analytics.
The officials said they intend to use their investigation to fix these problems in the mortgage industry.
"This is not simply about a glitch in paperwork," said Iowa Attorney General Tom Miller, who is leading the probe. "It's also about some companies violating the law and many people losing their homes."
Ally Financial Inc.'s GMAC Mortgage Unit, Bank of America and JPMorgan Chase & Co. already have halted questionable foreclosures. Other banks, including Citigroup Inc. and Wells Fargo & Co. have not stopped processing foreclosures, saying they did nothing wrong.
In a joint statement, the officials said they would look into evidence that legal documents were signed by mortgage company employees who "did not have personal knowledge of the facts asserted in the documents. They also said that many of those documents appear to have been signed without a notary public witnessing that signature, a violation of most state laws.
"What we have seen are not mere technicalities," said Ohio Attorney General Richard Cordray. "This is about the private property rights of homeowners facing foreclosure and the integrity of our court system, which cannot enter judgments based on fraudulent evidence."
Have a question about your foreclosure? Call the Office of Financial and Insurance Regulation in Lansing at 1-877-999-6442.
(Copyright 2010 WWJ Radio. All Rights Reserved. The Associated Press contributed to this report.)
