Attorneys General in all 50 States Probe Foreclosures

Attorneys General in all 50 United States opened a joint investigation into home foreclosures stating they will seek an immediate stop to all improper practices at banks or mortgage companies.  The AG's began a coordinated inquiry into whether banks and their loan servicers used false documents and/or signatures to justify hundreds of thousands of foreclosures.  Iowa Attorney General Tom Miller is leading the probe and intends to establish independent monitoring.  Goverment officials in at least 10 other states including Ohio and Florida have previously announced separate probes into questionable foreclosure practices. 

Ohio’s AG recently announced that he sued Ally’s GMAC Mortgage Financial Inc. in state court, claiming the GMAC unit committed fraud and violated state consumer law by filing false affidavits in foreclosure proceedings. On October 8, 2010 Bank of America Corp., the largest lender in the United States, extended a freeze on foreclosures to all 50 states as concern spread among federal and state officials that homes were being seized based on faulty or fraudulent documents.  Litton Loan Servicing LP, a mortgage-servicing business owned by Goldman Sachs Group Inc., also stated on October 8, 2010 that it was halting some foreclosures to review how they are handled.

As part of the probe, the group established an executive committee of legal officers from 12 states. The group’s initial goals include stopping improper foreclosures, reviewing past and present practices by mortgage servicers, evaluating potential remedies and establishing a mechanism for more effective independent monitoring of future mortgage foreclosure practices.

Some lenders have acknowledged that employees have completed affidavits without confirming their accuracy.  In a deposition of a foreclosure case in West Palm Beach, Florida, a GMAC employee stated under oath that a team of 13 people signed about 10,000 documents a month without verifying them.

Based on recent developments, affidavits and other documents have been signed by persons who did not have personal knowledge of the facts asserted in the documents and many affidavits were signed outside the presence of a notary public, contrary to state laws.