Foreclosure Fraud Inquiry Planned By Up To 40 States

WASHINGTON — The attorneys general of up to 40 states plan to announce soon a joint investigation into banks' use of flawed foreclosure paperwork.

A person briefed on the investigation said Saturday night that an announcement could come as early as Tuesday. The person spoke on condition of anonymity because the investigation was not yet public.

Iowa Attorney General Tom Miller will lead the investigation. Miller already has been leading multistate reviews of questionable foreclosure documents.

A joint investigation by 40 states would further escalate pressure on banks to widen their suspensions of foreclosures. On Friday, Bank of America became the first bank to halt foreclosures in all 50 states.

JPMorgan Chase & Co., Ally Bank's GMAC Mortgage unit and PNC Financial have stopped foreclosures in the 23 states where foreclosures must be approved by a judge.

The plans for a joint inquiry were reported earlier by Bloomberg News.

A furor has been growing as evidence has surfaced that mortgage lenders have been using flawed court papers to evict homeowners. That's led state and federal officials to ramp up pressure on the mortgage industry.

Officials in several states have either announced they are investigating potential legal violations or have called for a freeze on foreclosures.

Ohio Attorney General Richard Cordray was the first to sue a mortgage company over the issue. He sued Ally last week, claiming the company's employees signed and filed false documents to mislead courts. Ally says the company's practices were neither fraudulent nor deceitful.

Attorney General Eric Holder has said the federal government is looking into the issue.

And Sen. Christopher Dodd, D-Conn., the chairman of the Senate Banking Committee, said he would hold a hearing on the issue next month.

Problems with foreclosure procedures were discussed during two recent conference calls between officials from the Treasury Department, Department of Housing and Urban Development, White House and other agencies, according to an Obama administration official who spoke Saturday on condition of anonymity because the meetings were private.

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AP Business Writer Christopher S. Rugaber contributed to this report.

Comments

[chickenwarriors]

01:15 AM on 10/29/2010

EVERYONE TELL OBAMA TO CRASH THE BIG BANKS NOW!

The Fed and their complicit banks must be abolished to save the Republic!
It’s the only thing we can do. CRASH THE BIG BANKS NOW “Too Big Too Fail” apparently means “Too Big To Succeed” and “Too Big for their own Wallets”

The sooner the better. Why don’t we ask a 3rd grade math student what he thinks? The real problem is that a politician who could do something about it has his own mathematical challenges about healthy economies. “Bite the hand that feeds him” (by indicting Banksters), or make millions putting children in the streets for power and profit.

Apparently ALL politicians are going to make the same choice over and over again. They have always sold the souls of your children and their future and they always will. Take the big Banksters out of the picture. Build a local banking system that cares about its community and helps it thrive instead of sucking the life out of it by bribing and fixing the entire system for itself, taking us all of a cliff with it.

Crash all the big banks now. Create new local Banks only = No more Wall Street Banksters.

Problem Solved! J Glenn Lowe

Die Banker Die - A Tribute to the Wall Street Banksters that suck the life from all of us and our economy just to get a nice Christmas Bonus - http://www.youtube.com/watch?v=YGFZ1Jj3ui8

[lulu54]

09:04 AM on 10/26/2010

I think this will be best addressed on the local (state) level vs. waiting for Feds to make some kind of move. I have a friend who is part of group in Washington getting ready to recall the AG (not sure if they are electing new one this year or not) if the AGs office doesn't begin tangible movement on this front. It doesn't pass the sniff test to claim no misleading or deceitful practices when you submit docs to a court of law under penalty of perjury stating that you have read them fully when in fact you have not...remember this is a crime in most states. People are pissed and I would not be surprised to see this get away from the Feds.

[lulu54]

07:05 PM on 10/25/2010

I am looking for the states to take the lead here, I think. the Fed will do nothing or else will act too late...

[PKofPNW]

05:42 PM on 10/14/2010

Tried to post a comment to the more recent article regarding the now all-50-state Attorneys General inquiry into foreclosure/servicing fraud, but couldn't... so here I am here :-)

Yesterday's (10/14/10) announcement is toothless, based on my own experience filing a complaint. I dutifully filed my mortgage note servicing complaint, with proof of fraud, and promptly received a message from my own state's AG/DFI office:

"
We have received your complaint regarding Chase Home Finance LLC, a
subsidiary of JPMorgan Chase Bank, National Association. The Division of
Banks regulates state chartered financial institutions. We do not have
the authority to take corrective action against national institutions.
For your convenience, we have forwarded your complaint to the [FEDERAL] regulatory
agency under whose jurisdiction this matter falls."

Needless to say... they are simply forwarding complaints on to the OCC in Houston, Texas.

Which begs the question... what the heck is this big announcement of a 50-statewide AG inquiry really all about?

As for me, all I want is for my mortgage servicer to abide by the terms of my signed mortgage note contract. They have consistently failed to do so (arbitrarily changed the terms of my note's due date; applied payments directly to principal and not toward 'amount due'; etc.).

I feel like David facing Goliath, without a slingshot, and blindfolded.

-PK of the PNW

[Todd Koson]

11:21 PM on 10/11/2010

http://4closurefraud.org/2010/10/10/4closurefraud-exclusive-president-obama-falls-victim-to-chase-robo-signer/

[yohuntsy2]

05:31 PM on 10/11/2010

A friend of mine has a 100,000 dollar mortgage on a house now valued at 140,000. At the market peak it was valued at 270,000. His mortgage payment is 843.00 USD a month. He paid medical bills and is 3 months behind. Yet he earns about 3400 a month. He now has renters and in a few months will be able to catch up. He asked to refinance. The lender refused and are foreclosing. I am wondering why the lender won't refinance. The lender can get the money from the Fed with almost no interest. They can refinance the loan at say, 105,000, at a lower interest rate, and use the extra loan money to pay off the past due amount and cover a few additional months. Instead, the house will sell for much less than it is worth, and the lender most likely will not get back what is owed on it.

[Old Claudius]

09:49 PM on 10/11/2010

In most of these cases, yohutsy2, the foreclosing bank, or a real estate managing subsidiary, is who buys the property from the foreclosure auction. The foreclosure auction gives the foreclosure buyer a clean title to the property. If the property, under its old title, was sold by the original lender to a mortgage backed securities bundler and then sold and resold, and maybe copied and the copies (synthetics) were sold and resold, and maybe in some cases borrowed against, all of that fiddlery remains behind, attached to the old title. The forecloser/mortgage-seller, or forecloser and mortgage seller, get away with what they sold for, and get the property with a clean new title as well. The property will be turned over to a real-estate subsidiary and resold. Since the lender was paid by the sucker who bought the mortgage as a security, whatever the property is resold for is free money to the lender/forecloser. And, in addition, the lender gets out from under the mess left by, or that might blow up from, the mortgage backed security sale.

As far as the foreclosing lender is concerned, screwing your friend is just good business.

[Masonx]

04:48 PM on 10/11/2010

We just looked at buying a FL ocean and river front house (short sale) that was purchased in 2004 for $1.2 M and where the current asking price is under $500K. When we looked at the investment value over the next 10 years, the taxes $12K/yr. (which aren't being lowered from the $1.2M price) and the insane insurance of over $10K/yr. consume any chance of value appreciation in an economy where growth is expected to stay around 2% for the next decade and an economy where there is not real market mechanisms for creating new jobs.

The housing recovery isn't just about banking corruption. Municipal political and housing insurance empires have been built on top of the inflated housing prices of 2000-2005 enabled by the Bush administration and aided and abetted by the Obama administration. These greedy bastards are just as culpable and corrupt as the bankers - but there is no pressure on them to re-evaluate their taxes and insurance charges and or give up part of their empire. Housing recovery can't occur when taxes are or insurance are unrealistic and there is no tangible way (manufacturing, innovation, exports, etc.) for job markets to recover. We are living in a government slight-of-hand economy, but the reality will ultimately become very apparent and there will be no moratorium on the results of that reality.

[maxhardon]

03:46 PM on 10/11/2010

Looks like the banks have shot themselves in the foot on this one. Apparently in the effort to maximize profits and minimize taxes they set up REMICs (Real Estate Mortgage Investment Conduits) to act as a straw man (corporation?) to buy up mortgages and bundle them into MBS's - Mortgage Backed Securities. In order to do this tax free the REMIC could not actually hold ownership of the mortgage, but instead held them in trust as a custodian. However, when the mortgages were bundled into an MBS, the REMIC transfered ownership as though they had owned the mortgage, which would make them lose their tax free status and be subject to (horror of horrors for a bank) taxes.

So I would guess the self imposed moratorium on foreclosures will last just long enough for the banks' lawyers to figure out a way to get themselves out of this mess, and as I mentioned in the beginning maximize their profits and avoid paying any taxes at all.

[BonnieDoon]

02:25 PM on 10/11/2010

A moratorium should be put in place immediately!

Doing so would stop and prevent the banksters from covering their tracks before auditors can be put in place to assess the scope of damage and havoc wreaked on many consumers.

This morning, on Morning Joe, Jim Cramer said that in fact a moratorium should be called to determine how pervasive the scandal really is. He said the Mortgage Industry had enjoyed benefitting from huge fees and profits during the boom and now the Industry must be held accountable.

[Newsjunqee]

02:31 PM on 10/10/2010

It's high time that this country followed the example of Japan in connection with corporate fraud. In this country we worshiip, admire and richly reward corporate malfeasants.

In Japan, a corporate punter is made to pay for his egregious abuses.

Until this happens, nothing will change.

The foreclosure fraud will be "investigated" by a "commission" made of people who have benefited handsomely from this fraud. One or two scapegoats may be fingered, then everything will return to normal. Foreclosures will very likely resume at double the pace to make up for lost time and just in time for the yearly February $multi-million bonus dole-outs, as the remaining foreign investors will follow the many who had left Wall Street over the last three years, the Dow-Jones will keep assuring us that the stock market is thriving with daily fraudulent numbers, Bernanke will tell us again and again that the depression is over, and the government will approve yet another distribution of TARP largesse to make-up for the banks' losses between now and the bonus payout date.

On the other hand, I don't think I have ever hoped to be wrong as I am today.

[reader1]

12:02 PM on 10/10/2010

What a mess, this is only the beginning. The emperor has no clothes!!!

[Carolyn Ervette Powell]

10:48 AM on 10/10/2010

One day I said America was doomed but just because I say that does not make that be so but Bank of America has given me a sense of hope with my own understanding that Bank of America may not be the problem but the solution to set the stage for the way deeds are recorded who can and cant pay property taxes on property in a mortgage and the process by which those matter are acknowledged. We all must admit that some of the challeges we are facing are new one because laws are changed and the bank requires that they be respected but when a bank or title company is not informed of another one intent they have no way of deaqling with that challege until it is first acknowledged and Bank of America has said holed up that give America hope on this issue and we have no many issues to confront.

[fred53]

10:37 AM on 10/10/2010

The real issue here isn't just about bank fraud, it's about the possibility that
the chain of ownership or standing to foreclose has been irepairably broken
by the MERS system, If that is the case the mortgages are unenforceable
because no one has the standing to foreclose. The note would be enforceable
but as a civil claim by an unsecured creditor, just like a credit card. The really key
thing to understand here is that the homes, maybe 80% of the homes mortgaged
in the last 10 years or so, could not be re-mortgaged. Why is that important?
Since all new money that enters the economy does so at usury, i.e. as loans,
trillions of dollars in the normal flow of mortgage loans will stop. This will put
enormous political pressure on the Fed to either loan at zero interest or,
hopefully the president to abolish the FED and return the issuance of credit
to we the people as the Constitution mandates. It's unlikely that Congress will
get away with another TARP bailout so the banks, at the very least might have
to give up the TARP thay have and filter it back into the economy at zero interest.

[sonomarc]

12:44 PM on 10/10/2010

Just to add to what you've stated already. The best way to replace the FED is to have each state create its own public bank, with a charter that specifies how the loans issued are to be used. The Bank of North Dakota does this and specifies that their loans are to be used for farmers and students. These loans can be originated by community banks, thereby eliminating the need for wall st. banks (and the FED) to create a money supply within our local communities.

[Steve-o-k]

10:07 AM on 10/10/2010

'flawed paper work'? I think forged will be the word used soon. Sounds like it. From what I understand, the banks, after bundling the mortgages so many times and selling, can't even find original paper work. Hence, create (forge) new documents. This is no place close to over. If BoA is pulling up it 50 states, the problem is HUGE... All this banks see serious class action and are dancing the wire without a net.. It will get ugly.

[turfkiller]

12:36 PM on 10/11/2010

Maybe we should buy stock in Photoshop.

[ThatsTheTheWayItIs]

09:29 AM on 10/10/2010

TO THOSE WHO THINK THE BIG BANKS GOT AWAY WITH SOMETHING.
Look at before/after crash stock prices of big banks:

Goldman: was $240, now $145
Citigroup: was $55, now $4
Morgan Stanley: was $73, now $25
BOA: was $55, now $13

Remember that investors own the big banks, the CEO and others are just employees who report to the board, who report to stockholders. The owners of the big banks were severely punished, lost more than half their money.

This crash was a disaster for the big banks. Most analysts believe they will never recover, that the dominance of US banks is over, finished.

Before you reply denying this, try doing some research, like looking at stock prices. They are what the experts think of the future of US big banks. They think Citigroup is worth less than 10% what it was before.

[Pleroma]

09:33 AM on 10/10/2010

"Experts" created this.

Personally, I think Citigroup is worth nothing. Zero. Nada.

[Newsjunqee]

02:36 PM on 10/10/2010

Better yet, they should start paying anyone who deigns to do business with them!

[abbadabba]

09:13 PM on 10/10/2010

Have to agree. Thought so two years ago. Back then they had a "Citi Never Sleeps" campaign owing to their global presence for which we had to extend FDIC protection to foreign depositors. I liked to say, "Night, night, Citi. Pass me the pillow."

Now, I'm surprised the banks can keep their stocks up. But then again, that implied quazi-government insurance system has covered them this long. And we're holding all their bad baloney as collateral for loans via the Fed and FDIC. We're screwed, so why shouldn't they be, too?

[AvgJoeBlow]

09:41 AM on 10/10/2010

No they should have had their assets seized and broken up, and management prosecuted under RICO, and no longer be in business.
Lower stock prices, is not even a light slap to these criminal Banksters and their Government employed Minions. How about we start rewarding your glorious "Stockholders" to invest in Manufacturing and Main Street instead of Financial Flim-Flam Derivatives, legalized loan-sharking and ginned up off-the-books trading scams that we still are in danger of? 200-300 TRILLION! last time I saw someone try and estimate it. -AJB

[sonomarc]

12:49 PM on 10/10/2010

Agreed. Seize the large lenders who securitized and sold these mortgages by commiting fraud. Investors in the paper can seek redress from the courts. Judges can restructure contracts (new principle, new interest rate, new mo. payment, etc.) and the investors can either hold onto it or sell it, but not securitize it. This way uncertainty (and risk) in the market is eliminated and organized crime is effectively dealt with. Oh yes, lock the mobsters up!

[ThatsTheTheWayItIs]

03:53 PM on 10/10/2010

The "banksters" were just employees of the ultra-rich stockholders. Same with BP: it's the stockholders, not Tony Haywood. CEOs are just workers, paid little compared to the billions they make for rich people who do nothing for that money.

It's called CAPITALism for the reason. Capital is the enemy, runs the country, not workers, not even CEOs, they are just shills.

The owners of the banks lost more than half their money, so did the owners of BP. I find that satisfying, the less knowledgeable blame the employees and think they got away with something.