All 50 State Attorneys General Join Foreclosure Probe
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- Kara Johnson | October 13, 2010
State attorneys general in all 50 states are launching a coordinated investigation into whether lenders misrepresented foreclosure claims through a practice known as robo-signing.
The group, to be led by Iowa Attorney General Tom Miller, will investigate reports that lenders failed to follow proper legal procedures in foreclosing on homes. Specifically, the AGs will look into whether employees or other lender representatives routinely signed off on thousands foreclosure affidavits without verifying the information they contained, or failed to have such affidavits signed in the presence of a notary.
Such actions could constitute deceptive acts and/or unfair trade practices, as well as violating other state laws and court rules, according to a statement released by Miller’s office today.
“This is not simply about a glitch in paperwork,” Miller said. “It’s also about some companies violating the law and many people losing their homes.”
Several major lenders have previously announced that they have suspended foreclosures in some or all 50 states while they review foreclosure documentation, including Ally Financial (GMAC Mortgage), JP Morgan Chase, Bank of America and Goldman Sachs, among others.
The lenders have expressed confidence that their own reviews will show that the claims submitted in the affidavits were truthful and accurate. JP Morgan Chase CEO Jamie Dimon told reporters today that there is “almost no chance we made a mistake.”
Simply being accurate in their claims may not be enough to get mortgage servicers off the hook, however. Although homeowners in foreclosure will likely still lose their homes if claims can be backed up, lenders may still be subject to fines or other legal sanctions if the attorneys general determine that laws were broken.
Acting through an executive committee, the multistate group will contact individual mortgage servicers. The group will review past and present foreclosure practices, and evaluate potential remedies for improper actions in the past and to deter such actions in the future.
Miller called such actions “starting points” and said the group may limit, expand or change its objectives from there.
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