States Probe RoboSigning

Thursday, October 14, 2010 - 9:47am

Investigators from all 50 states are looking for improper and illegal practices during foreclosures.

Officials in all 50 states have launched a joint investigation targeting major U.S. lenders.

Iowa Attorney General Tom Miller is one of those leading the effort focused on allegations that lenders repossessed homes without ever verifying key details.

Agents have admitted signing-off on hundreds-of-thousands of foreclosures without reviewing critical documents, a process dubbed "robo-signing".

"The robo-signing is the key issue, the issue that triggered this investigation," Miller says.

JP Morgan Chase and GMAC Mortgage have already stopped foreclosure evictions in 23 states,
while Bank of America, the nation's largest lender, has voluntarily suspended foreclosures nationwide.

Some analysts worry that could put an added strain on a distressed housing market already stretched to its limits.

"Delaying these foreclosures really is just delaying their entry into the resale market, delaying the ability of the American whole housing market to recover and reset," says consumer advocate Tara-Nicholle Nelson.

Others argue the market has already hit rock bottom.

"There still will be no recovery in housing market until jobs recover," says Wharton professor Susan Wachter.

In August alone a record 95,000 homes were repossessed.

Almost one in every seven Americans with a mortgage is either behind on payments or currently in foreclosure.


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