Finance Globe

U.S. financial and economic topics from several finance writers.
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All 50 States on Board in Foreclosure Probe

The mortgage mess that started with bad paperwork to put people into homes looks to be continuing in the same manner, only this time it’s to get many of those very same people out of their homes.

Iowa Attorney General Tom Miller is leading the investigation into reports that some of the largest mortgage servicers in the country engaged in practices that violated the law, specifically, using “robo-signers” to authorize thousands of foreclosure documents, and falsifying notary stamps.

Miller said in a statement, ““What’s important here is this is a cooperative and coordinated effort by states to address a serious problem. This is not simply about a glitch in paperwork. It’s also about some companies violating the law and many people losing their homes.”

Today it was announced that the probe will be joined by attorneys general in all fifty states, as well as state banking and mortgage regulators in more than three dozen states.

The term robo-signers refers to mortgage servicer employees who systematically sign up to hundreds of documents a day without knowing what it is they are signing.

It has been reported that many of these robo-signers had little or no knowledge of foreclosure proceedings, definitions of common legal terms used in foreclosure documents, and that they often did not even read the documents they put their signatures on.

Arizona Attorney General Terry Goddard said in a statement, "It's shameful that this far into the housing crisis there are still serious questions about possible fraud in the foreclosure process and whether homeowners have been treated fairly."

"This investigation will gather the facts and hold mortgage servicers accountable for following legal procedures and for working with borrowers in good faith to try to resolve issues short of foreclosure,” Goddard continued. “I have been prosecuting mortgage fraud for the past several years, and I will not hesitate to take legal action against any lender found to have engaged in fraudulent practices."

In response to the probe, Bank of America has halted foreclosure proceedings in all fifty states to look into whether robo-signing has been practiced for their foreclosures.

Ally Financial - the parent company of GMAC Mortgage - said in a statement on Tuesday, “GMAC Mortgage is committed to preserving the integrity of the foreclosure process and in that spirit has engaged several leading legal and accounting firms to conduct independent reviews of its foreclosure procedures in each of the 50 states.

"Foreclosure is a very serious matter and only implemented when all other home preservation options have been fully exhausted. We are taking these additional steps to restore confidence in the process, which is critical for the stability of the home and mortgage industry."

Over the past couple months, GMAC has halted foreclosures pending file reviews in the 23 states that require the process to go through the court system.

Citigroup has not stopped doing foreclosures, but they have discontinued using the services of “the Foreclosure King” - a firm of multimillionaire attorney David J. Stern - while the firm is being investigated by the Florida attorney general for how foreclosures have been handled through this company.

JP Morgan Chase has “identified issues” tied to affidavits and is expanding its review to 115,000 files in 43 states, according to a report from MartketWatch.

But according to a Bloomberg report, JP Morgan Chase CEO Jamie Dimon said that there’s almost “no chance” that the bank made mistakes in seizing homes. “Maybe mistakes were made, but not where someone got evicted out of a home that shouldn’t have been,” Dimon said.

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Thursday, 26 November 2020

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