Officials in all 50 states and the District of Columbia have come together for an investigation into allegations that mortgage lenders mishandled documents and improperly foreclosed on homes.
A group of attorneys general and banking regulators announced Oct. 13 they will review whether lenders allowed their employees to improperly process paperwork or make false statements during proceedings. Massachusetts Attorney General Martha Coakley told The Boston Globe that she now doubts whether mortgage lenders have treated homeowners fairly.
“We have serious concerns as to the veracity and accuracy of the affidavits and other documents used in foreclosures by certain lenders, and whether homeowners received the information they are entitled to under the law,” Coakley said.
Among other charges, lenders may have submitted paperwork signed by homeowners ignorant to the facts laid out in the documents.
In response, the Bank of America has stopped foreclosures procedures temporarily nationwide as it investigates the claims. GMAC and JPMorgan Chase will follow suit in 23 states.
Prince George’s County, Md. was hit hard by the wave of foreclosures, and Gov. Martin O’Malley said he has an obligation to those families to make sure they weren’t taken advantage of by lenders.
“In Maryland, we have consistently been on the side of Maryland families who are facing the loss of their homes,” O’Malley said in a statement. “We have worked with federal and state law enforcement to punish those who have perpetrated foreclosure rescue scams and other forms of mortgage fraud in our state. We have a similar responsibility to Marylanders to investigate whether these robo-signings and other practices by bankers and loan servicers trampled upon laws that were designed to protect homeowners in default.”
Political leaders are debating placing a temporary moratorium on the foreclosures until the probe has completed, but financial commissioners and attorney generals involved in the investigation said they are just looking to get answers for consumers.
“It is imperative that these large companies slow down, fully and openly examine their practices, and admit where the process is failing,” Maryland Attorney General Doug Gansler said in a statement. “Working together as a group and with one voice, we can help ensure that homeowners facing foreclosure are treated fairly and according to the law.”
Depending on its results, the investigation could cost the banks tens of billions of dollars. On Oct. 14, according to The New York Times, shares of Bank of America fell 5.2 percent while shares of JPMorgan Chase sank 2.8 percent on news of the investigation.