The head of the state attorneys general task force investigating the <"http://www.yourlawyer.com/topics/overview/Wrongful-Bank-Foreclosures-Lawyer-Lawsuit-Attorney">mortgage foreclosure fiasco says the probe is on a “fast track” and could result in multiple settlements. According to Bloomberg News, Iowa Attorney General Tom Miller also said a blanket settlement with all banks and mortgage services was not likely.
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 â€œforeclosure factories,â€ 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 â€œrobo-signers.â€ 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 banksâ€™ disclosures have prompted multiple investigations, including this 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.
Miller was tapped to head up the attorneys general probe because of his involvement with other mortgage cases, Bloomberg said. His successes include serving as lead investigator on two home loan cases that resulted in settlements totaling $809 million. In 2002, Household Finance agreed to pay $484 million to consumers to settle a 50-state investigation over home loan practices. Ameriquest Mortgage Co. reached a $325 million settlement with the attorneys general in 2006 to resolve claims the lender cheated customers by misrepresenting loan terms and getting inflated appraisals.
Miller also heads up a separate foreclosure prevention group of state attorneys general, Bloomberg said.
Miller told Bloomberg that he believed a culture pervading mortgage servicers allowed the current foreclosure fiasco to happen.
“When we first started talking to the servicers, the problems were perceived to be that they werenâ€™t putting enough resources into this,â€ Miller said. â€œYou need a lot more resources to modify loans. Itâ€™s a culture thing. They were in the business of collecting, not in the business of finding a better dealâ€ for consumers, he said.
He said a 50-state agreement with the services, by which they agree to commit more resources, could address that problem. Improved loan modification procedures, including additional modifications, might also be part of any agreement, he said.
But Miller cautioned that a “global settlement” of the foreclosure issue was unlikely. â€œIt would be one bank at a time.â€ he said.