Regulators look into foreclosure fraud

Regulators look into foreclosure fraud

Bank regulators and attorneys general of 49 states are starting a nationwide investigation about widespread foreclosure fraud allegedly committed by mortgage firms to thousands of homeowners.

Specifically, the officials would try to find out whether employees of mortgage companies filed papers incorrectly or knowingly prepared false documents.

“This group has the backing of nearly every state in the nation to get to the bottom of this foreclosure mess,” said Tom Miller, Iowa Attorney General, who will head the investigation.

The state regulators want lenders to improve the process of foreclosures, pay fines for violations, and extend more help to homeowners with impending foreclosure.

But they are also considering a settlement with the mortgage companies and a possible creation of an independent monitoring office to see if banks are solving their problems.

“We want the companies to put in a system such that this will not happen again,” Miller said. “We want to explore what other remedies might be available, in a way that makes homeowners and the general housing economy better off.”

Some banks like Citigroup Inc. and Wells Fargo & Co. have denied allegations of any wrongdoing, but employees of JPMorgan Chase, Ally Financial, and Bank of America have signed depositions saying that they prepared foreclosure documents without thoroughly reviewing them.

“This is a serious matter, and I think that the financial firms that engaged in this practice have real exposure,” said Richard Cordray, Ohio Attorney General.

The White House and federal regulators have thrown their support behind the probe launched by the state officials to address the problems in the mortgage sector.

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Posted by James Fried on Friday October 15 2010, 11:20 AM EST. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0