Yesterday, amid growing concerns about defects in foreclosure procedures, a bi-partisan, 50-state mortgage foreclosure group, led by Iowa’s Attorney General, announced an investigation into the alleged practice of "robo-signing" by mortgage loan servicers. Broadly speaking, "robo-signing" refers to signing documents without knowledge of their accuracy, but the investigation will focus on mortgage loan servicers that "signed affidavits or signed other documents in support of either a judicial or non-judicial foreclosure" without "personal knowledge of the facts asserted in the documents." The working group’s announcement also notes that some affidavits that were submitted in the foreclosure proceedings may not have been properly notarized, in violation of state law.
Yesterday’s announcement follows a number of other statements and announcements from around the country regarding examinations of foreclosure practices, including:
- Florida’s Attorney General sent letters to a number of major lenders and servicers requesting meetings with executives "to discuss ways to promptly and effectively redeem the integrity of the foreclosure process and ensure the marketability of real estate titles in Florida." The letter explained that the Attorney General was "distressed to learn from media reports that [the lenders] may have engaged in filing faulty affidavits in foreclosure cases in Florida courts with regard to ownership of promissory notes and affidavits that attested to personal knowledge."
- GMAC Mortgage, a subsidiary of Ally Financial and one of the nation’s largest mortgage lenders, which two weeks ago announced a 23-state review of defective foreclosure practices, issued a press release on Tuesday announcing its intention to review foreclosure procedures in all 50 states and explaining additional measures it was taking to ensure appropriate foreclosure procedures were followed: "foreclosure sale files nationwide receive an additional review by a specialized team to ensure that: home preservation procedures have been fully followed; the timing and substance of the foreclosure is appropriate; and the file itself is in good order and complies with all laws and requirements of the state of jurisdiction."
These developments are fueling calls for a national foreclosure moratorium, which many fear would further damage the housing markets. As White House Press Secretary Gibbs said in a press briefing on Tuesday, "We also have pointed out, though, that the idea of a national moratorium would impact the recovery in the housing sector, as anybody that wished to enter into a contract or execute a contract to purchase a home that had previously been foreclosed on, that process stops. That means houses and neighborhoods remain empty even if there are buyers ready, willing and able to do so. So we want to protect consumers. We support what state attorneys generals are doing in looking into the mortgage process to ensure that consumers are protected."