California among 49 states to jointly investigate foreclosure practices
California is among 49 states teaming up to investigate how lenders have verified foreclosure documents, according to a coalition of state law enforcement officials.
The joint investigation, formally announced Wednesday morning, is being headed by Iowa Atty. Gen. Tom Miller. It comes in reaction to disclosures by several major lenders, including Bank of America Corp. and JPMorgan Chase & Co., that employees dubbed "robo-signers" had vouched for the accuracy of foreclosure documents without even reading them.
The documents were filed to support summary judgment orders from judges allowing foreclosures to proceed with a trial.
More than half of all states, including California, normally process foreclosures outside of the court system and so are not directly affected by this issue.
However, when lenders begin the non-judicial foreclosure process in California, they must file a declaration that they are in compliance with a state law requiring them to first contact or diligently try to contact the homeowner to discuss options other than seizing the home.
California Atty. Gen. Jerry Brown has said he wants to determine whether lenders are complying with that California law. (Click here to read his announcement on the investigation.)
JPMorgan said Wednesday morning that it has expanded its examination of its foreclosure procedures from the 23 judicial foreclosure states to 41 states. It was not immediately clear why it had done so or whether California is on the list.
JPMorgan has put foreclosures on hold in those states while it checks for problems -- something Bank of America has done in all 50 states and several other lenders have done in some states.
Many consumer groups and some politicians had called for a national moratorium on foreclosures while the matter is being sorted out. But the Obama administration has rejected that idea, saying it would further disrupt a housing market that in order to resume normal functioning needs to have a huge backlog of defaulted mortgages cleared out.
-- E. Scott Reckard