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Groups Say Iowa AG Retreats From Promise To Be Tough On Robo-Sign Banks

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IOWA ATTORNEY GENERAL TOM MILLER
Iowa Attorney General Tom Miller, testifies during a Senate Banking, Housing and Urban Affairs Committee hearing on problems in mortgage servicing from modification to foreclosure. |

This post has been updated

The attorney general leading the investigation into "robo-signing" mortgage companies may be backtracking on promises to help Americans wrongly foreclosed on stay in their homes.

Iowa Attorney General Tom Miller is no longer promising to press criminal charges against bank officials who fraudulently foreclosed on homes, according to Iowa community groups.

"In our first meeting with AG Miller we felt like we had a champion that was ready to go toe to toe with the big banks," Hugh Espey, director of Iowa Citizens for Community Improvement said in a statement. "This time we left wondering if the big banks had knocked the wind out of our state's top law enforcer."

Community groups grew concerned after a meeting on Tuesday, when Attorney General Miller did not repeat promises he made last December to help families back into their homes or prosecute bank staffers if there was evidence of fraud.

Attorney General Miller did not respond to requests for comment.

In October, regulators from all 50 states launched an investigation into possibly deceptive foreclosure practices that may have illegally evicted families from their homes. The bipartisan group of state attorneys general from all 50 states and state financial regulators from 38 states announced announced plans to work together to comb through foreclosure filings and documents to see if any state laws have been broken in the rush to kick borrowers out of their homes.

The investigation was sparked when homeowners and community groups complained that mortgage providers failed to follow foreclosure procedures. Bank employees in mortgage departments inundated with foreclosures say they signed foreclosure affidavits without reviewing the cases, or in some cases, without even looking at the documents -- earning the label "robo-signers." Banks allegedly hired extra staffers, including hair stylists and Walmart employees -- some of whom couldn't even define the word "affidavit" -- to work through the stacks of foreclosures.

Last December, Attorney General Miller, who is leading the 50-state investigation into foreclosure-gate, promised to work on saving as many homes as possible. "This is not simply about a glitch in paperwork," Miller said in a statement at the time. "It's also about some companies violating the law and many people losing their homes."

The Financial Crisis Inquiry Commission, the bipartisan panel created to investigate the roots of the crisis, found lenders may have used bogus documents when originating mortgages and passed them through to other entities before they were sold to investors, ignoring basic due diligence along the way. The discovery of the use of "robo-signers" may have concealed "much deeper problems in the mortgage market," the Congressional Oversight Panel found.

UPDATED: This story originally misstated Iowa Attorney General Tom Miller's name.