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States probe mortgage industry practices | Reuters

(Reuters) - All 50 states launched a joint investigation of the mortgage industry on Wednesday, a move some experts fear will cause uncertainty and threaten the recovery of the fragile housing market.

The state attorneys general are looking at allegations some banks used shoddy or fraudulent paperwork to remove struggling borrowers from their homes during a foreclosure crisis that is one of the most visible wounds of the 2007-2009 recession.

"We are in the fourth year of a housing and economic crisis that was brought on by lax practices of the mortgage lending industry," Minnesota Attorney General Lori Swanson said in a statement. "The latest allegations of corner cutting and slipshod paperwork are troubling, but perhaps not surprising."

Industry experts warn the investigation could put the brakes on foreclosure proceedings. One of every four homes sold in the second quarter was a foreclosed property and any slowing could have an impact on the broader economy, as the housing market traditionally drives recoveries after a downturn.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Oct 13th, 2010 at 03:45:50 PM EST
[ Parent ]
The Wheels Are Coming Off in MBS Land: All 50 State AGs Join Probe; Banks Abandoning MERS Foreclosures « naked capitalism
Even though the headline item is the fact that the attorneys general in all 50 states are joining the mortgage fraud investigation, the real indicator that the banks are stressed is that they have started abandoning MERS, the electronic database that passes itself off as a registry for mortgages. JP Morgan has quit using it as an agent on foreclosures; it clearly can't withdraw from it fully, given that it has become a central information service.

Despite this being treated as a pretty routine event in the JP Morgan earnings call, trust me, it isn't. The withdrawal of JP Morgan from the use of MERS as the face in foreclosures is a tacit admission that the past practice of using MERS as the stand -in for the trust is problematic. I've heard lawyers discuss the possibility of class action litigation to invalidate all MERS-initiated foreclosures in states with strong anti-MERS rulings; this idea no doubt will get more traction given JP Morgan's move. (An attorney who is in the thick of this situation told me another major bank has made the same move as JPM, but I see no confirmation in the news as of this writing).



"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char
by Melanchthon on Wed Oct 13th, 2010 at 06:04:28 PM EST
[ Parent ]
a move some experts fear will cause uncertainty and threaten the recovery of the fragile housing market.

Well, it is good to be able to fob blame onto those trying to uphold the law for the consequences of lawless behavior by the mortgage industry. The recovery is not "fragile" it is non-existent. In Mt. Home, AR the Building Committee of the City Council has canceled meetings for the second month in a row for lack of new work to review and the work they last reviewed had been set in motion at least a year previously, except for some permits for advertising billboards.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 14th, 2010 at 12:19:16 AM EST
[ Parent ]
I did not have to search for an article promoting that talking point in line one - the Reuters piece was the first I looked at. (And will of course be picked up by numerous news outlets).
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 14th, 2010 at 04:51:58 AM EST
[ Parent ]
I did not have to search for an article promoting that talking point in line one...

Yeah, it's obvious to the merest bankster, I would imagine. No memo required. Investigate us and the world will collapse. Obama clearly can see that.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 14th, 2010 at 09:33:06 AM EST
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Concern trolling is part of the Zeitgeist...

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Thu Oct 14th, 2010 at 09:38:02 AM EST
[ Parent ]
How 2 civilian sleuths brought foreclosure problems to light | McClatchy

PALM BEACH, Fla. -- More than a year before lenders, law firms and document companies began owning up to widespread paperwork problems with their foreclosure filings, Lisa Epstein and Michael Redman already knew that something was wrong -- very wrong.

Redman, a former online automobile consultant, got his first taste of the problem in early 2008, when he tried to help a relative who was facing foreclosure.

As he tried to determine which of three or four supposed lenders held the note, Redman, 35, realized that not only did he not know the answer, neither did any of the companies that were asking for payment.

Epstein, a nurse who cares for cancer patients, also is going through foreclosure. She got her baptism in the world of shoddy foreclosure paperwork in the summer of 2009, however, when she tried to help a brain tumor patient keep her home.

[...]

Equal parts agitators, activists and advocates, Redman and Epstein have made their presence felt in Florida and nationally through their respective websites, 4closureFraud.org and foreclosurehamlet.org.

Now we know whom to thank.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt ät gmail dotcom) on Thu Oct 14th, 2010 at 03:00:31 AM EST
[ Parent ]
and the banks know who to blame.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Thu Oct 14th, 2010 at 10:25:20 AM EST
[ Parent ]
FT.com / Companies / Banks - Wells adds to crisis over home seizures
The US mortgage foreclosure crisis deepened as it emerged that Wells Fargo may have used practices that prompted rivals to halt home repossessions, and JPMorgan Chase said banks might be fined over the issue.

Bank of America, JPMorgan and GMAC have halted foreclosures after learning that "robo signers" had rubber-stamped thousands of mortgage documents without checking their accuracy. Attorneys-general in 50 states have launched a joint investigation into the matter.
More FT video

Jamie Dimon, JPMorgan chief executive, on Wednesday became the first top banking executive to say some attorneys-general may levy penalties on banks for their foreclosure practices.

Legal documents obtained by the Financial Times suggest that Wells Fargo, the second-largest US mortgage servicer, also used a "robo signer". Unlike its rivals, Wells Fargo has not halted foreclosures. The San Francisco-based bank said on Tuesday it was reviewing some pending cases, but it has maintained that it has checks and balances designed to prevent serious procedural lapses.

In a sworn deposition on March 9 seen by the FT, Xee Moua, identified in court documents as a vice-president of loan documentation for Wells, said she signed as many as 500 foreclosure-related papers a day on behalf of the bank.



"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char
by Melanchthon on Thu Oct 14th, 2010 at 05:55:00 AM EST
[ Parent ]
This should probably read

Wells Fargo may have used practices that prompted rivals to "halt" home repossessions

According to Naked Capitalism

GMAC announced a foreclosure halt in all 50 states; JP Morgan and Bank of America have stopped in 23 judicial foreclosure states.

Or have they? Florida is a judicial foreclosure state, and local reports suggest the banks are pressing forward with foreclosures. Note the inconsistencies between the statements of the bank employees versus the action on the ground.

by gk (gk) on Thu Oct 14th, 2010 at 06:10:14 AM EST
[ Parent ]
No surprise in Florida. A bank friendly state government and friendly judges have created "Kangaroo" foreclosure courts that allow 90 seconds for the defendants to make their case, according to one report I posted previously.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 14th, 2010 at 09:42:58 AM EST
[ Parent ]
Thinking about this from another direction, I think about my dad's office building. For years he had the mortgage with banks that kept getting bought out, eventually turning into CitiBank. They have routinely told him to forget it when he asks them for loans to do such things as repair the roof.

But, odds are that the fobbed off the original loan, or it was fobbed off long before Citi came in. As a person with a record of decades of good payment, his was probably sold with packages of trash loans to balance them out.

Citi could straighten it all out by giving him a new loan...which he wants since it would give him lower payments at a time when 3 different clients have run out on their leases over the last year, leaving a basically empty building except for the lessee who hasn't paid in two years...but he has been paying the mortgage out of his savings.

Citi could get a new clean note, my dad would get a lower payment, everyone happy. Are they that clever. No. They won't even consider giving him a new loan.

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Thu Oct 14th, 2010 at 07:15:00 AM EST
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