Saturday, October 16, 2010

MORTGAGE & FINANCE: AG asks for halt to foreclosures

Coakley wants banks to prove they comply

Attorney General Martha Coakley called for a moratorium on Massachusetts home foreclosures yesterday in a letter to four major lenders, saying she wanted proof that each is properly reviewing homeowner foreclosure documentation as required under state law.

Coakley said she wanted Bank of America, JPMorgan Chase & Co., Wells Fargo, and GMAC Mortgage, a part of Ally Financial, to suspend foreclosures and sales of foreclosed properties after revelations that some lenders had signed off on foreclosures for thousands of homeowners in other states without reading or verifying the documents, a process nicknamed “robo-signing.’’

“If they’re not complying with the law, it doesn’t give consumers enough time or opportunity to modify the loan or do anything short of foreclosure,’’ Coakley said in an interview. “If that’s what’s happening, it’s pretty outrageous.’’

Officials at Wells Fargo and Bank of America did not return calls yesterday. A spokesman at JPMorgan Chase declined to comment. GMAC/Ally declined to comment on Massachusetts specifics.

“As we have previously stated, we are confident that the processing errors did not result in any inappropriate foreclosures,’’ Jim Olecki, GMAC/Ally spokesman, wrote in an e-mail. He said the company “takes this matter very seriously and are acting with urgency to resolve the issue.’’

Several large banks have halted foreclosures in 23 states that require judicial review of foreclosures, after evidence surfaced last week that employees were signing and notarizing foreclosure documents without reading or reviewing them. The banks, however, did not halt foreclosures in states that do not require judicial review, drawing the ire of public officials in Massachusetts and elsewhere.

In one of the strongest pushes so far for federal intervention into the problem, more than 30 House members from California have called on federal regulators to investigate whether mortgage companies broke the law by using paperwork that may have contained errors. Led by Representative Zoe Lofgren and House Speaker Nancy Pelosi, the lawmakers have urged bank regulators and the Justice Department to initiate a probe into how borrowers’ requests for assistance have been handled.

Senator Robert Menendez, a New Jersey Democrat, has also asked more than 100 mortgage companies to determine whether foreclosure documents they approved contained errors and to reveal their findings. Attorneys general in Delaware and Texas called on lenders to suspend foreclosures until banks can ensure they have followed proper procedures. Last week, Attorney General Richard Blumenthal of Connecticut asked a state court to freeze all home foreclosures for 60 days.

Menendez and Democratic Senator Al Franken of Minnesota have also asked Congress’s investigative arm, the Government Accountability Office, to examine whether federal regulators overlooked the problems.

In Massachusetts alone, there were 2,713 foreclosure petitions in August, a 13.2 percent increase from August 2009, according to Warren Group, a real estate tracking firm in Boston.

Coakley has asked the banks to respond by Oct. 15.

Lewis Finfer, executive director of the Massachusetts Communities Action Network, a housing advocacy group in Boston, said he applauded Coakley’s leadership, because it could help struggling homeowners.

The banks’ actions “were instrumental in the foreclosure crisis and their hands have not been clean in this,’’ he said. “This is very serious. These are people’s homes at stake.’’

Megan Woolhouse Boston Globe October 6, 2010

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