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Joint investigation to look into foreclosure paperwork

Thu, Oct 14th 2010 12:00 am
By ALAN ZIBEL
AP Real Estate Writer

WASHINGTON - The attorneys general from up to 40 U.S. states plan to announce soon a joint investigation into banks' use of flawed foreclosure paperwork.

A joint investigation by 40 states would further escalate pressure on banks to widen their suspensions of foreclosures.

A furor has been growing as evidence has surfaced that mortgage lenders have been using flawed court papers to evict homeowners. That has led state and federal officials to ramp up pressure on the mortgage industry.

Officials in several states have either announced they are investigating potential legal violations or called for a freeze on foreclosures.

Iowa Attorney General Tom Miller will lead the investigation. He already has been leading multistate reviews of questionable foreclosure documents.

Last week, Bank of America became the first bank to halt foreclosures in all 50 states.

JPMorgan Chase & Co., Ally Bank's GMAC Mortgage unit and PNC Financial have stopped foreclosures in the 23 states where foreclosures must be approved by a judge.

The plans for a joint inquiry were reported earlier by Bloomberg News.

Ohio Attorney General Richard Cordray was the first to sue a mortgage company over the issue. He recently sued Ally, claiming the company's employees signed and filed false documents to mislead courts. Ally says the company's practices were neither fraudulent nor deceitful.

Attorney General Eric Holder has said the federal government is looking into the issue.

And Sen. Christopher Dodd, Democratic chairman of the Senate Banking Committee, said he would hold a hearing on the issue next month.

Problems with foreclosure procedures were discussed during two recent conference calls between officials of the Treasury Department, Department of Housing and Urban Development, the White House and other agencies, according to an Obama administration official who spoke last week on condition of anonymity because the meetings were private.