State Officials To Explore Mortgage Foreclosure Practices

6892_naag_logo State Officials To Explore Mortgage Foreclosure Practices Three weeks removed from GMAC Mortgage's admission that its employees had signed foreclosure documents without personal knowledge of the facts asserted in the documents, a group of state mortgage regulators, state bank regulators and all 50 state attorneys general has been formed to address foreclosure practices conducted by some servicers.

The group has begun inquiring whether individual servicers have improperly submitted documents in support of foreclosures and says the facts uncovered in its review will dictate the scope of the group's inquiry.

Iowa Attorney General Tom Miller, who is leading the bipartisan effort, says the group's initial objectives include putting an immediate stop to improper foreclosure practices, reviewing past and present practices by servicers subject to the inquiry, evaluating potential remedies for past practices, and establishing a mechanism for the independent monitoring of future foreclosure practices. A ‘comprehensive list of individual mortgage servicers’ will be contacted, according to Miller.

"These are starting points, and it's possible this group may limit, expand or change its objectives," Miller says. "What's important here is this is a cooperative and coordinated effort by states to address a serious problem. This is not simply about a glitch in paperwork. It's also about some companies violating the law and many people losing their homes."

State bank and mortgage regulators are participating in the multistate working group both individually and through the Multistate Mortgage Committee, a coalition established in 2008 that represents mortgage regulators from all 50 states. In addition, 37 state financial regulators are participating directly.

The multistate working group says it believes servicing practices – such as the submission of affidavits or other documents that appear to have procedural defects – may constitute a deceptive and unfair practice in violation of state laws.

‘Our priority is to ascertain if violations of state law occurred, to re-establish confidence in the integrity of the foreclosure process, and take appropriate action to protect the rights of consumers and homeowners affected,’ says John Ryan, executive vice president of the Conference of State Bank Supervisors.

James Tierney, a former Maine attorney general and director of the National State Attorneys General Program at Columbia Law School, says allegations that servicers submitted fraudulent documents point out the need for tighter scrutiny at the state level.

"Lenders have not denied that they failed to follow the law in foreclosure procedures, but justified it by saying there were so many houses to foreclose that they just couldn't follow the law without actually hiring people to do it," Tierney says.

On Tuesday, GMAC said its internal review of cases involving judicial affidavits has not turned up evidence of any inappropriate foreclosures.

SOURCES: CSBS, Columbia Law School, Office of Attorney General Tom Miller


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