Pressure on nation's mortgage lenders intensifies-source

Sun Oct 10, 2010 3:37pm EDT

* State attorney generals to investigate foreclosures

* Joint effort not expected to push for moratorium

* Obama opposes national foreclosure moratorium

By Corbett B. Daly

WASHINGTON, Oct 10 (Reuters) - More than two-thirds of U.S. state attorneys general plan this week to launch a joint probe into charges some banks used fraudulent paperwork to kick struggling borrowers out of their homes, a source familiar with the effort told Reuters on Sunday.

Bank of America (BAC.N), the nation's largest mortgage servicer, an industry term for a firm that collects mortgage payments, on Friday said it would put a temporary halt to foreclosures nationwide as it looks into reports of shoddy paperwork.

Bank of America is the first bank to halt foreclosures in all 50 states. Bank of America, JPMorgan Chase & Co and Ally Financial Inc's GMAC Mortgage had earlier announced plans to suspend foreclosures in 23 states pending a review of foreclosure procedures.

The mortgage unit of Ally Financial, which is 56.3 percent owned by the U.S. government after a $17 billion bailout, has said employees preparing foreclosures had submitted affidavits to judges containing information they did not personally verify.

Senate Majority Leader Harry Reid, who is facing a tough re-election Nov. 2 in Nevada, where foreclosure rates are the highest in the nation, called on Friday for a national moratorium on foreclosures after Bank of America's announcement.

The source, who spoke on condition of anonymity, said the deadline for attorneys general to sign on to the investigation effort led by Iowa's Tom Miller was at the end of the day Monday, so a formal announcement could be made Tuesday.

At least half a dozen attorneys general have already announced individual investigations into the foreclosure mess.

The total number of attorneys general calling for an investigation is not precisely known but it is expected to be at least three dozen and possibly more.

At this stage, the joint effort is not expected to include a call for a moratorium, the source said, though some attorneys general have already done so in their individual states.

Many, including Miller, are running for re-election or election to other offices.

U.S. Attorney General Eric Holder said last week the Justice Department is looking into the widespread reports of bogus paperwork. It is not clear if the matter is under the jurisdiction of the states or the federal government but federal officials are looking into the matter, the source said.

President Barack Obama, however, opposes a national foreclosure moratorium, though he wants a quick resolution to any foreclosures that might have questionable paperwork, top White House adviser David Axelrod signaled on Sunday.

"I'm not sure about a national moratorium," Axelrod told CBS television. "Our hope is that this moves rapidly and that this gets unwound very, very quickly."

Banks are expected to take over a record 1.2 million homes this year, up from about 1 million last year and just 100,000 as recently as 2005, real estate data company RealtyTrac Inc. said last month. (Reporting by Corbett B. Daly; Editing by Bernard Orr)

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Comments (3)
Archjim wrote:
Having brought us to this point, what does our Banana Rupublic Government plan to do with the 5 MILLION families that will be leaving foreclosed homes ? SLEEPING BAGS ? TENTS ? How about some LAW ENFORCEMENT used on the Bastards that have robbed us ??

Oct 10, 2010 4:24pm EDT  --  Report as abuse
geoe1 wrote:
The average time between a missed mortgage payment and ultimate eviction is reported to be 18 months. That is 18 months rent free while the lender pays the fire insurance and property taxes and the homeowner pays nothing. Adding to this timeframe because of a technical glitch (no one says the affdavits are wrong, just that the information hasn’t been verified by the person signing it) just delays the inevitable. As many as a third of these houses are already vacant public nuisances that the lender is obligated to maintain (in many local jursidictions such as Los Angeles)but cannot obtain possession of. Government officials like Senator Harry Reid and California Attorney General (and gubernatorial candidate) Gerry Brown are just grandstanding to help them win their elections. The sooner these houses go back to the lender and are resold to homeowners who can actually afford the payments the better for just about everyone. The foreclosure crisis needs to work itself out before real estate and the rest of the economy can recover.

Oct 10, 2010 4:35pm EDT  --  Report as abuse
nardozi wrote:
Thought some of you might like to be made aware of the fact that of the 25,000 houses worth over $300,000 scheduled for repossession, only 83 have actually been placed on the market. This whole having your house foreclosed upon and sold thing only applies to the little people.
Now we know that there are flaws in the foreclosure processes that are currently placing houses on the market – what of the millions of homes foreclosed upon in the past couple of years? Are we to assume everything was perfect with those houses, and that the banks did indeed retain the clear title of ownership which would have allowed them to foreclose? There is such a thing in America as contracts and the rule of law – which means that if you foreclose you have to prove that you actually own the property you’re foreclosing upon. Simply having given a mortgage upon the property is not proof – the mortgage company may not own the property. In point of fact, it may no longer be determinable WHO owns the property. In that case it is wrong to foreclose upon the property since the buyer will NOT be able to obtain a clear title once he has finished paying for the property.

Oct 10, 2010 4:52pm EDT  --  Report as abuse
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