Foreclosure fraud investigation of top U.S. banks spreads to all 50 states
State law enforcers today announced formation of the Mortgage Foreclosure Multistate Group, which brings together attorneys general from 50 states, as well as and banking and mortgage regulators from more than 30 states.
"This group has the backing of nearly every state in the nation to get to the bottom of this foreclosure mess, and we plan to work together as thoroughly and expeditiously as possible," said Iowa Attorney General Tom Miller, who leads the group, in a statement. "This is not simply about a glitch in paperwork. It's also about some companies violating the law and many people losing their homes."
At issue is whether mortgage lenders falsified affidavits attesting to their review and verification of foreclosure documents, as well as whether they failed to sign the affidavits in the presence of a notary public.
"It appears affidavits and other documents have been signed by persons who did not have personal knowledge of the facts asserted in the documents. In addition, it appears that many affidavits were signed outside of the presence of a notary public, contrary to state law," the group said in a joint statement. "This process of signing documents without confirming their accuracy has come to be known as 'robo-signing.' We believe such a process may constitute a deceptive act and/or an unfair practice or otherwise violate state laws."
The group's initial objectives include:
- Halting improper mortgage foreclosure practices.
- Reviewing past and present practices.
- What to do to rectify the problem and stop it from happening again.
- Establishing a mechanism for more effective, independent monitoring of future mortgage foreclosure practices.
Cordray said Ohio is on course for more than 90,000 foreclosures this year, which would break last year's record. It's hard to say how many may involve false affidavits, he said. But he promised to "hold accountable those who submit fraudulent evidence in an effort to strip people of their private property rights without due process of law."
The story first made headlines in September, when GMAC Mortgage halted evictions in 23 states after reports surfaced that a GMAC employee admitted "robo-signing" more than 10,000 foreclosure affidavits a month,which GMAC attributed to a "procedural error." Within days, a number of attorneys general announced independent investigations of GMAC practices in their respective states.
The scandal quickly spread to other major mortgage lenders, with news reports that employees at Bank of America and JPMorgan Chase also admitted to the practice. Last Friday, Bank of America announced a suspension of foreclosure sales in all 50 states. GMAC yesterday announced it was expanding its foreclosure review to all 50 states, while Chase said it was expanding its foreclosure review to 41 states and 115,000 loan files.