By ROBBIE WHELAN And RUTH SIMON
A coalition of as many as 40 state attorneys general is expected Wednesday to announce an investigation into the mortgage-servicing industry, an effort some of them hope will pressure financial institutions to rewrite large numbers of troubled loans.
The move comes amid recent allegations that mortgage-servicers, which include units of major banks such as Bank of America Corp., submitted fraudulent documents in thousands of foreclosure proceedings nationwide.
The banks say the document problems are technical and the result of papers approved by so-called robo-signers with little review.
"I think the mortgage-servicing firms need to understand that they face real exposure now, and they would be well advised to take this very seriously, to clean this up by doing loan workouts to keep people in their homes, which up till now they've just paid lip-service to," said Ohio Attorney General Richard Cordray.
Some in Congress have called for a moratorium on all foreclosures until the documentation issue is resolved. Senior Administration officials Monday again declined to endorse that idea of a foreclosure moratorium. Servicers that have lied to courts by filing incorrect paperwork "need to suffer the consequences for their irresponsible actions," said Shaun Donovan, the Secretary of the U.S. Department of Housing and Urban Development.
The attorneys' general immediate aim is to determine the scale of the document problems and correct them. But several of them have said that the investigation could force the lenders and servicers to agree to mass loan modifications or principal forgiveness schemes. Other possibilities include financial penalties or changes in mortgage servicing practices.
President Obama vetoed a GOp sponsored bill last week that would have made the inter-state notarization of the robo-loans legal, forcing thousands of Americans from their homes. When attorneys have challenged these robo-loans in the courts, the foreclosure action was terminated by judges because of the loan irregularities.
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The move comes amid recent allegations that mortgage-servicers, which include units of major banks such as Bank of America Corp., submitted fraudulent documents in thousands of foreclosure proceedings nationwide.
The banks say the document problems are technical and the result of papers approved by so-called robo-signers with little review.
"I think the mortgage-servicing firms need to understand that they face real exposure now, and they would be well advised to take this very seriously, to clean this up by doing loan workouts to keep people in their homes, which up till now they've just paid lip-service to," said Ohio Attorney General Richard Cordray.
Some in Congress have called for a moratorium on all foreclosures until the documentation issue is resolved. Senior Administration officials Monday again declined to endorse that idea of a foreclosure moratorium. Servicers that have lied to courts by filing incorrect paperwork "need to suffer the consequences for their irresponsible actions," said Shaun Donovan, the Secretary of the U.S. Department of Housing and Urban Development.
The attorneys' general immediate aim is to determine the scale of the document problems and correct them. But several of them have said that the investigation could force the lenders and servicers to agree to mass loan modifications or principal forgiveness schemes. Other possibilities include financial penalties or changes in mortgage servicing practices.
President Obama vetoed a GOp sponsored bill last week that would have made the inter-state notarization of the robo-loans legal, forcing thousands of Americans from their homes. When attorneys have challenged these robo-loans in the courts, the foreclosure action was terminated by judges because of the loan irregularities.
see the complete article at: http://online.wsj.com/article/SB10001424052748704518104575546512922974100.html?mod=WSJ_hpp_LEFTWhatsNewsCollection
Subscribe to the Rightardia feed: feeds.feedburner.com/blogspot/IGiu
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