Key senator demands more than 100 lenders disclose any errors in foreclosure documentsBy Alan Zibel, AP
Tuesday, October 5, 2010
Senator demands lenders reveal foreclosure errors
WASHINGTON — A key lawmaker is demanding that more than 100 mortgage companies determine whether foreclosure documents they approved contain errors and reveal their findings.
Sen. Robert Menendez, D.-N.J., sent letters Tuesday to three banks that have halted foreclosures in 23 states after evidence surfaced that their employees or outside lawyers signed documents without reading them. Menendez leads a Senate subcommittee that oversees housing issues.
He wrote to the three major lenders that have halted thousands of foreclosures — JPMorgan Chase, Bank of America and Ally Financial — along with dozens of other companies.
“I want to know how deep this problem goes and what safeguards are now in place to prevent unjustified rubber-stamp foreclosures from happening in the future,” Menendez said.
Along with Sen. Al Franken, D-Minn., Menendez also requested that Congress’ investigative arm, the Government Accountability Office, examine whether federal regulators overlooked problems at mortgage companies. They asked the GAO to recommend whether federal regulatory agencies should have more authority.
Sen. Jeff Merkley, D-Ore., has urged the Treasury Department and the Department of Housing and Urban Development to launch their own investigations.
State and federal officials have been ramping up pressure on the mortgage industry over concerns about potential legal violations. The potential violations include signing documents without reading them and filing inaccurate paperwork.
On Tuesday, Massachusetts Attorney General Martha Coakley called on the same three lenders — plus Wells Fargo & Co. — to halt foreclosures. That state is not affected by the three banks’ foreclosure freeze because it does not require judges to approve foreclosures.
But Coakley noted that lenders still must comply with state law, which requires that borrowers receive official notices before a foreclosure is complete.
“We are concerned that major lenders gave scant attention to compliance with state law governing foreclosures,” she said.
Earlier in the week, Maryland Gov. Martin O’Malley, Delaware Attorney General Beau Biden and Texas Attorney General Greg Abbott called on lenders to suspend foreclosure actions until they can ensure that banks have followed proper procedures.
Connecticut Attorney General Richard Blumenthal last week asked a state court to freeze all home foreclosures for 60 days. And Ohio Secretary of State Jennifer Brunner has asked a federal prosecutor to review thousands of Ohio foreclosures.
A Florida investigation into foreclosure practices was dealt a setback this week when a state judge denied a subpoena for information from a law firm. Florida Attorney General Bill McCollum had sought the information.
Tags: Government Regulations, Industry Regulation, North America, United States, Washington