Lawmakers seek foreclosure investigations

WASHINGTON Wed Oct 6, 2010 1:37am EDT

A foreclosed home is shown in Chicago in this June 29, 2010 file photo. REUTERS/John Gress

A foreclosed home is shown in Chicago in this June 29, 2010 file photo.

Credit: Reuters/John Gress

WASHINGTON (Reuters) - California Democrats in the House of Representatives are calling for federal investigations into whether financial institutions broke any laws in their handling of foreclosures in the midst of the housing crisis.

Reports from thousands of homeowners in their congressional districts show an "apparent pattern" of practices that led to foreclosures that could have been avoided, the lawmakers wrote in an October 4 letter to Attorney General Eric Holder, Federal Reserve Chairman Ben Bernanke and the Treasury Department.

The letter was signed by House Speaker Nancy Pelosi and 30 California lawmakers.

"The excuses we have heard from financial institutions are simply not credible three years into this crisis. People in our districts are hurting," the letter said. "It is time that banks are held accountable for their practices that have left too many homeowners without real help."

The lawmakers said thousands of people have reported that despite efforts to seek loan modifications or other relief many financial institutions "routinely fail to respond in a timely manner, misplace requested documents, and send mixed signals" about what is required to avoid foreclosures.

At least six states are investigating the foreclosure procedures at Ally Financial Inc or JPMorgan Chase or both.

Ally, formerly known as GMAC, revealed last month that officials had signed thousands of affidavits supporting foreclosure proceedings without having personal knowledge of the borrowers' situations.

A seventh state, Texas, on Tuesday halted all foreclosures, sales of foreclosed properties and evictions from foreclosed properties until foreclosure practices are reviewed.

(Editing by Eric Beech)

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Comments (3)
biggredd wrote:
a lot of this can be avoided if only the financial institutions would work with us. My husband took a 30 percent paycut and we when we went to ASC to modify our loan they told us it was no problem that we qualified. Then after our 3 months worth of trial payments to them, we received a letter stating that they could not work with us at this time and we should look at a short sale. What a crock of crap. Now we are just waiting for our foreclosure notice.

Oct 06, 2010 1:22am EDT  --  Report as abuse
aelemay wrote:
This is nothing less than the seizure of stockholder’s money in order to give it to borrowers.

This completes the sub-prime racket which Congress used to buy votes for Democrats (at one time mandating that 50% of all loans be sub-prime.)

Unlike the Government,these institutions do not have unlimited money to give away. The next step is nationalization of the banks and a radical reduction in lending to householders.

If financial institution stockholders see their equity reduced or eliminated, who will lend, obviously the government. This will make the deficit worse, and cost the taxpayers real money.

This is a crime and Congress are criminals for doing this.

Oct 06, 2010 2:40am EDT  --  Report as abuse
ssetiabudi wrote:
Financial institutions derailed its fubction to be speculators at derivative market as well as selling sophisticated products in lack of transparency of the future risks.
Further more journalists and rating agencies,acted like businessmen rather than their professional work as well as regulators failed to execute its oversight duty to the financial institutions.
Currently ,a lot of media lost integrity,credibility due to conspiration in destructing of the truth in order to get the money at the expense fake news.

Oct 06, 2010 3:01am EDT  --  Report as abuse
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