40 State Attorneys General to Investigate Mortgage Fraud; Bank of America Halts Evictions Nationwide; Senator Reid Calls for More Suspensions

Bloomberg reports Attorneys General in 40 States Said to Join on Foreclosures

Attorneys general in about 40 states may announce a joint investigation into foreclosures at the largest banks and mortgage firms, according to a person with direct knowledge of the matter.

State attorneys general led by Iowa’s Tom Miller are in talks that may lead to the announcement of a coordinated probe as soon as Oct. 12, said the person, who declined to be identified because a final agreement hasn’t been reached. The number of states may change because several are still deciding whether to join the investigation, the person said. New Mexico Attorney General Gary King said today in a statement that his state will join a multi-state effort.

“We are aware of or involved in a large number of investigations that lead us to believe there are in the neighborhood of 40 state attorneys general who have initiated investigations or expressed an interest,” McManemin said in a telephone interview.

Officials in at least seven states have already announced investigations into claims that employees at home lenders and loan servicers signed court documents without ensuring the information was accurate. Yesterday, Miller said in a statement that he was working with state officials, banking regulators and the U.S. Justice Department to launch a coordinated review. Attorneys general in Ohio and Connecticut have said some of the practices may amount to fraud.

If by some chance you have missed this story, please see SEC Failure to Regulate MBS Resulted in "Interconnected Ponzi Scheme with Various Types of Concurrent Fraud" for a detailed recap.

Bank of America Halts Evictions Nationwide

Reuters reports BofA U.S.-wide foreclosure halt draws calls for more

U.S. lawmakers pushed for the country's largest mortgage lenders to suspend foreclosures in all 50 states after Bank of America Corp announced on Friday it would temporarily halt evictions nationwide.

BofA, the largest U.S. mortgage servicer, is the first U.S. bank to institute a nationwide freeze on foreclosures, expanding on a 23-state suspension announced last week while it conducts a review of its procedures.

The foreclosure furor is erupting just weeks before November 2 congressional elections where voters look set to take out their anger at high unemployment and a sluggish economy on Democrats who currently control both the House of Representatives and the Senate.

Senate Majority Leader Harry Reid, House Oversight Committee Chairman Edolphus Towns and California Attorney General Jerry Brown, who is running for governor, called on other lenders to follow Bank of America's lead.

Wells Fargo has said that it is "confident" in its foreclosure paperwork, and Citigroup is also resisting calls for a foreclosure moratorium.

As of Friday afternoon, other major mortgage servicers had not followed Bank of America.

At least one senior official at the Federal Reserve is concerned about the mortgage foreclosure process and its potential impact on the economy.

Proper Perspective

Before this is over I would expect nearly every state to join in these lawsuits. Legal costs will be massive.

However, it is very important to remember that except in extremely rare and highly publicized cases, there is essentially no dispute that who were foreclosed on have not been paying their mortgages and are in default.

In other words, in nearly every case, these people are going to lose their homes and indeed should lose their homes. The question is not whether these people should or will lose their homes, but rather who has the legal right to foreclose.

These delays will be very expensive which should be expected when there is this much fraud.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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