Officials in 49 of our 50 states and the District of Columbia have launched a joint investigation in the allegations that documents involved in the foreclosure process were mishandled in the foreclosures of thousands of homes throughout the US. During their investigation, the attorneys general will be verifying whether documentation was incorrectly handled and/or false statements were made. Alabama is the only state that has not joined the investigation.
In a joint statement, the officials said they would review evidence that legal documents were signed by mortgage company employees who “did not have personal knowledge of the facts asserted in the documents.” They also said that many of those documents appear to have been signed without a notary public witnessing that signature — a violation of most state laws.
This all comes on the heels of the announcements made by many of the larger lenders that they are currently freezing foreclosures in many if not all states. Currently Ally Financial's GMAC Mortgage Unit, Bank of America and JPMorgan Chase have announced the foreclosure freeze, along with many other smaller servicers.
Wells Fargo, CitiGroup and Litton Loan Servicing have all said that they are not halting any of their foreclosures, but are conducting reviews of their process and making modifications as needed. A spokesman for Wells Fargo, one of the nation's largest loan servicers, said the bank is conducting additional reviews of documents, but is not freezing foreclosures. Litton said in a statement that it "has suspended foreclosure proceedings in certain cases while it completes a review of its procedures."
Ally Financial (previously GMAC), announced Tuesday that they have hired outside accounting and legal firms to review their foreclosure procedures in all 50 states. They have said they will be reviewing the overall process, not individual cases. They have also said they will review pending foreclosure sales to ensure that all documents are accurate while continuing to temporarily suspend evictions and post foreclosure proceedings in 23 states.
Bank of America is the only bank that has halted foreclosures in all 50 states. The other banks have only halted in the 23 states that require a judge to sign off on the foreclosure. Because of this, California home owners will see little affect of the foreclosure freeze. We are hopeful that this will further help to entice the banks to move forward with their short sale approvals while going through this review process.
If you are facing foreclosure or have any questions regarding a short sale and the foreclosure process, please do not hesitate to contact our team.