Officials in 50 States Launch Foreclosure Probe

Published on
by
Associated Press

Officials in 50 States Launch Foreclosure Probe

by
Alan Zibel

In this March 10, 2009 file photo, victims of foreclosure and their supporters take part in a rally on Capitol Hill in Washington. Attorneys general in 50 states have launched a joint investigation into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners. (AP Photo/Lauren Victoria Burke, file)

WASHINGTON — Officials in 50 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.

The allegations raise
the possibility that foreclosure proceedings nationwide could be subject
to legal challenge. Some foreclosures could be overturned. More than
2.5 million homes have been lost to foreclosure since the recession
started in December 2007, according to RealtyTrac Inc.

The state officials said they intend to use their investigation to fix the problems that surfaced 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 some 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 review 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."

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