Mortgage Foreclosure Irregularities. An anxious Bank of America is seeking a speedy settlement to end a 50-state probe into mortgage foreclosure irregularities, according to an article in The New York Post. Yesterday, CNBC reported that the Attorney General of Iowa, who is heading the investigation, was close to a deal with Bank of America, JP Morgan Chase and Wells Fargo.
Last month, several home loan lenders, including JP Morgan Chase, Bank of America and GMAC Mortgage, suspended various aspects of the foreclosure process after discovering irregularities in the preparation of court documents. In many instances, the banks outsourced foreclosure processing to “foreclosure factories,” which processed tens of thousands of court documents every month. It now turns out that the foreclosure affidavits processed by those companies were signed by personnel who came to be known as “robo-signers.” In many cases, the robo-signers were not reading or verifying documents where they were signed, and in many documents were not properly notarized.
The banks’ disclosures have prompted multiple investigations.
The banks’ disclosures have prompted multiple investigations, including the one by attorneys general in all 50 states. Those investigations could uncover criminal misconduct or large-scale errors that force foreclosures to be put on hold for an extended period of time. That will encourage thousands of people whose homes have been seized or are facing foreclosure to mount legal action against the banks.
According to the New York Post, Bank of America CEO Brian Moynihan said yesterday that a quick settlement of the attorneys’ general investigation would be the best solution for all involved.
It’s understandable that Bank of America would want this whole mess to go away. According to a report released by the Congressional Oversight Panel overseeing the TARP bailout, banks could face “significant harm” if the validity of 33 million loans is called into question. If an investor in a mortgage-backed security were to force a bank to repurchase a loan because the firm had misrepresented the quality of that loan, the problems could be severe. Under such a scenario, an investor action could force Bank of America to repurchase and absorb partial losses on up to $47 billion in bad loans, the panel said.
Under the proposed settlement reported by CNBC, the banks would pay into a fund for foreclosed borrowers. The settlement would also include banks doing away with simultaneous modification and foreclosure proceedings with individual borrowers, the report said.
Even if a settlement is reached with the attorneys general over foreclosure irregularities, the banks might still not be out of the woods. According to the Post, the Financial Crisis Inquiry Commission has become the latest US regulator to investigate banks for possible fraud in the $6.4 trillion mortgage-bond market. And New York City’s Comptroller filed a shareholder request with Bank of America, Wells Fargo, JPMorgan and Citigroup asking that independent directors conduct an audit of foreclosure practices at the four banks.
Need Legal Help Regarding Wrongful Foreclosure Probe?
New York City, Long Island, New Jersey, and Florida
Our personal injury attorneys NY are here to help you when you need it the most.