All 50 States Start Inquiry Into Foreclosures

By REUTERS

State attorneys general in all 50 states started a joint investigation into the mortgage industry on Wednesday, a move some experts fear will cause uncertainty and threaten the recovery of the housing market.

The officials are investigating accusations that some banks used shoddy paperwork to evict borrowers from their homes during a foreclosure crisis that is one of the most visible wounds of the economic downturn.

“We are in the fourth year of a housing and economic crisis that was brought on by lax practices of the mortgage lending industry,” the Minnesota attorney general, Lori Swanson, said in a statement. “The latest allegations of corner-cutting and slipshod paperwork are troubling, but perhaps not surprising.”

The attorneys general will be looking at the practice by banks and companies that collect monthly mortgage payments by using “robo-signers” — people who sign hundreds of affidavits a day.

The use of robo-signers “may constitute a deceptive act and/or an unfair practice or otherwise violate state laws,” the attorneys general said, because the signers did not properly review the documents.

The paperwork controversy has refocused attention on the foreclosure crisis weeks before the Nov. 2 congressional election in which Democrats are predicted to suffer major losses because of voter unhappiness over President Obama’s economic policies.

JPMorgan Chase said Wednesday that it had identified some issues in its review of foreclosure affidavits but was “pretty comfortable” that its decisions to foreclose had been proper.

JPMorgan, which posted higher-than-expected profits on Wednesday, has halted foreclosures in the 23 states where the actions need a judge’s permission. Bank of America, the largest mortgage servicer, and GMAC Mortgage, which is part of Ally Financial, have suspended foreclosures nationwide.

Posted in bubble, Corruption, Eviction, securities fraud |