Multistate Foreclosure Fraud Probe Widens

By Tanya Roth, Esq. on October 13, 2010 | Last updated on March 21, 2019

As of today, October 13, the attorneys general of every state, with the exception of Alabama, have joined the multi-state fraud probe into the actions of the mortgage loan service industry. The companies who are the focus of the investigation include Bank of America, J.P. Morgan Chase and Ally Financial. These lenders and others will be under the scrutiny of investigators who will examine claims they acted improperly or in some cases fraudulently, in their efforts to foreclose on properties and evict borrowers from their homes.

The Washington Post reports the fraud probe will begin with an examination of the "robo-signers," the lender's employees who signed off on thousands of foreclosures every month without reviewing the files as required by law. Indiana AG Greg Zoeller told the Post the investigation will also look into claims by attorneys for homeowners that lenders even forged signatures and improperly notarized documents.

Ohio AG Richard Cordray is the first to lead the charge to the courts. According to the Post, he became the first attorney general to sue a mortgage lender. Cordray has filed suit against Ally, (formerly known as GMAC) for improper foreclosures. Ohio will be seeking damages of $25,000 per violation.

The lenders are challenging the fraud probe saying that if any improprieties occurred, they were procedural, and the vast majority of foreclosures were factually valid. However, many major lenders are slowing, halting, or re-examining the process. According to CNNMoney, the following is a list of the actions some major lenders are currently taking:

  • Bank of America: BofA has stopped foreclosure sales in all 50 states. The actual foreclosure process will continue, but it will not proceed to judgment or sale.
  • JPMorgan Chase: Chase is now reviewing 56,000 foreclosure cases in the 23 states that require a judge to sign off on a foreclosure and is reviewing documents in additional states.
  • PNC Financial Services: The company has halted some foreclosure proceedings during its review of documents.
  • Litton: This company is a subsidiary of Goldman Sachs. Litton has suspended foreclosure proceedings in some cases during a review of its procedures.
  • Ally: The lender has already announced a temporary suspension of evictions and post-foreclosure closings in judicial states. Ally has hired independent contractors to conduct a review of processes in all 50 states.
  • Wells Fargo: The bank is conducting additional reviews of documents, but has not halted any foreclosures.

If your lender is on this list and you are facing forclosure proceedings, contact them to find out if their current policies of review or suspension of foreclosures could affect your loan.

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