Banks Pressed by Attorneys General to Halt, Fix Foreclosures

Wednesday, 13 Oct 2010 07:10 AM

 

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Florida’s attorney general asked U.S. lenders to come up with a solution to the foreclosure crisis, just as state officials around the country are set to open an investigation into their practices.

Florida Attorney General Bill McCollum asked five lenders and mortgage servicing companies yesterday to meet with him to “discuss ways to promptly and effectively redeem the integrity of the foreclosure process,” according to a letter sent to the companies.

“The first and foremost thing is to do it right, but we can’t sit and do this for weeks and weeks,” McCollum said in an interview. “It’d be very deadly for Florida’s economy.”

The move by the top prosecutor in Florida comes as a coalition of about 40 state attorneys general, led by Iowa’s Tom Miller, is planning to announce a multi-state investigation today. Authorities in at least 10 states have begun investigations into foreclosure practices at some of the nation’s largest lenders.

These states will be part of the coalition, attorneys general or their representatives confirmed: California, Ohio, New Mexico, Texas, Florida, Iowa, Illinois, Michigan, Louisiana, South Dakota, West Virginia and Minnesota.

New York Attorney General Andrew Cuomo yesterday called for lenders to halt foreclosures in his state amid allegations of fraudulent documents used in the cases, according to a statement from his office. California Attorney General Jerry Brown demanded a freeze on Oct. 8.

‘This Mess’

“All lenders should halt foreclosures until they clear up this mess and ensure that the process is fair and complies with California law,” Brown said in a statement.

McCollum is seeking to meet with Bank of America Corp., JPMorgan Chase & Co., Ally Financial Inc.’s GMAC Mortgage unit, PNC Financial Services Group Inc. and Goldman Sachs Group Inc.’s Litton Loan Servicing LP, according to copies of the letters.

Litigation and moves by the banks to freeze foreclosures “are counterproductive,” the attorney general wrote. It could take “many months, even years” to correct faulty affidavits and reopen cases, he said.

“We would look forward to a meeting,” said Joseph Evangelisti, a spokesman for New York-based JPMorgan. He declined to comment about Cuomo’s probe.

Bank of America’s Jumana Bauwens said the Charlotte, North Carolina-based bank will work with the attorneys general “to address concerns they have expressed.” Donna Marie Jendritza, a spokeswoman for Litton Loan Servicing, declined to comment. A spokesman for PNC, based in Pittsburgh, Pennsylvania, couldn’t be reached for comment.

‘Robo-Signing’

Cuomo said he is requesting information from Bank of America, JPMorgan, GMAC Mortgage and Wells Fargo & Co. as he probes the validity of documents used in home foreclosures. Cuomo is looking into allegations of “robo-signing,” or the filing of affidavits that falsely attest the signer has personal knowledge of the facts in a foreclosure proceeding.

Wells Fargo isn’t planning to suspend foreclosures, Jason Menke, a spokesman for the San Francisco-based company, said in a telephone interview.

“A number of officials have contacted us about our foreclosure process and we will be sharing our views with them,” Menke said. “We remain confident in the controls and procedures we have.”

Gina Proia, a spokeswoman for Detroit-based Ally Financial, declined to comment about the actions by the attorneys general. GMAC said in a statement that it has hired law and accounting firms to conduct independent reviews of its foreclosure proceedings.


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