Foreclosure problems prompt local and federal investigations
GMAC Mortgage is hardly the only lender governments at both the state and federal levels are looking into after allegations of sloppy paperwork and possible mortgage fraud involving major financial institutions.
These accusations have caught the attention of the Attorneys General in many states and in Washington. A senior white house adviser says it's a serious problem, but questions the need for a blanket halt to all foreclosures, which some are calling for.
Last Friday, Bank of America became the first bank to halt foreclosures in all fifty states. GMAC and three other lenders have suspended home seizures in the 23 states where courts oversee foreclosures.
California is not one of those states, there is no judicial review required here. Interestingly, most of the problems have occurred in the “judicial review” states.
The banks say there is little to no evidence that the foreclosures were improper, that the homeowners were in fact, behind on payments.
Assuming that's true, if the paperwork that was used to seize homes was flawed, is that just sloppiness or fraud?
Here is an example of the type of mess ups being reviewed, a Bank of America employee has acknowledged signing up to 8-thousand foreclosure documents without reading them, even though she previously claimed to judges that she had.
Soon, perhaps this week, the Attorneys General for a few states are expected to announce a joint investigation into the allegations.