Bloomberg Reports Joint Effort by as many as 40 State Attorney’s General to Investigate Foreclosures

Reporters Dakin Campbell and Prashant Gopal from Bloomberg News are reporting that about 40 state Attorneys General are in talks (led by Tom Miller of Iowa) to join forces in a coordinated probe of the largest banks and mortgage firms.  New Mexico Attorney General Gary King issued a statement yesterday saying that he will join a multi-state effort.

While most commentators refer to “questionable practices,” or “signing court documents without ensuring the information was accurate,” attorneys general in Ohio and Connecticut have said some of the practices may amount to fraud.

An announcement may come as soon as October 12.

A swiftly growing list of lenders, including Bank of America, JPMorgan Chase & Co. and Ally Financial Inc. have already frozen foreclosures in at least 23 states where foreclosures require court supervision, amid allegations that employees used unverified or false data to speed the process. Litton Loan Servicing LP, a mortgage-servicing business owned by Goldman Sachs Group Inc., said yesterday it’s halting some foreclosures to review how they’re handled.

Senate Majority Leader Harry Reid, a Democrat from Nevada, called on other banks and mortgage firms to follow Bank of America’s lead and “review their practices to ensure that they are not unfairly targeting homeowners in Nevada and across the nation,” according to a statement yesterday.

Connecticut Democrat Christopher Dodd, said in a statement. “Regulators at the federal, state and local levels have a responsibility to uphold the law and protect consumers from unfair foreclosure.”

Lenders took possession of a record 95,364 homes in August and issued foreclosure filings to 338,836 homeowners, or one of every 381 U.S. households, according to RealtyTrac Inc., an Irvine, California-based data vendor.

TOM’S COMMENTARY:

This has been building for many months.  In depositions taken of key employees of some of the law firms prosecuting these foreclosures in Florida, shockingly sloppy, as well as downright dishonest and fraudulent procedures seem much more the rule than the exception.

My prediction is that people will go to jail, significant numbers of attorneys will be disbarred, and a surprising number of mortgages will prove to be entirely unenforceable under the strict application of existing law regarding assignments of mortgages from one lender to another.  The Congressional Oversight Committee has flatly declared that it is “impossible” to determine who actually owns some of these loans.

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