AGs In Every State Open Joint Foreclosure Investigations

On the heels of a massive fraudulent foreclosure document scandal, Attorneys General in all fifty states opened a joint investigation into home foreclosures, pledging to halt any and all wrongful practices at mortgage companies and banks.

The league of justice says they want to stop improper foreclosures, check out what mortgage servicers have been and are currently doing, figure out fixes, and set up an independent body to keep track of mortgage foreclosure practices

All well and good, but, It’s been four years – no one thought to do this before?

Attorneys General in 50 States Open Foreclosure Investigation [Bloomberg]

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  1. Paintmann says:

    +1 for the Lego justice league.

  2. heart.shaped.rock says:

    Bravo to the government for helping people keep their homes when they lose their jobs and can’t afford the payments any more! Congrats to those who believed that taking on $300k in debt to have a roof over your head is the American Dream (even though you can’t really afford it). Hey, I wonder if the government will step in and pay rent for people who lost their jobs but DIDN’T take on 300k in debt to have a roof over their heads??? Eh, prolly not.

    • kmw2 says:

      The moral hazard here is not with the mortgage holders. It is with the banks, who gave mortgages to people who could maybe not afford it (which was far from clear at the time) with the full knowledge that if they defaulted, their loans were secured through the government. Then they swapped the mortgages around so much no one actually knew what they owned. Then when the money stopped flowing, they perjured themselves in order to rush a foreclosure through. Have you been paying attention, like, at all? Ever in the past three years?

      • Alvis says:

        Bull. Greedy people wanted houses NOW, rather in 30 years when they had saved enough to afford them. If they didn’t have this demand for undeserved rewards, they’d still be happily renting like the rest of us.

        • Loias supports harsher punishments against corporations says:

          Do you truly believe the majority of forclosures were because of greedy homeowners?

          Or is it possible that the combination of ALL the other possible reasons combined make up the much larger percentage.

          • Oranges w/ Cheese says:

            A large percentage were most probably because of greedy bankers who threw huge amazing aspirations in front of star struck buyers. Bankers have this air of trust and reputability about them, why would you all of a sudden doubt that?

            A lot of the foreclosures are because people bought into loans they couldn’t afford, yes, but many of them were deceived. The rest are coming from people fed up with the decreasing value of their homes, or people who have lost jobs.

        • Powerlurker says:

          If a bank is stupid enough to give you a 100% LTV non-recourse mortgage, why shouldn’t you take it? They’re the professionals who are paid to know better. The purpose of big down payments isn’t to protect the buyer, but to protect the bank.

        • mac-phisto says:

          yes. that’s it exactly. greedy borrowers forced banks to falsify legal documents. no flaws in that argument.

        • kmw2 says:

          No, greedy bankers told people that had saved up a little bit of money and got their credit a little bit on track that they were FULLY QUALIFIED for an ARM, without telling them that it would start to adjust and double or triple their payments in a couple years. This was built on an assumption that a home’s value would always appreciate, which failed dramatically in 2006 as the housing bubble popped. Those greedy bankers (and more importantly mortgage brokers) then encouraged them to lie on applications, submitted incomplete applications, and sometimes changed the applications themselves to make sure they got their 2% of the purchase price. Blaming marginal mortgage applicants for believing what they were told by the experts that helped them get a loan and the banks that gave it to them is both incorrect and ridiculous.

      • Powerlurker says:

        I’d actually place the blame farther down the investment chain with the ultimate purchasers of and investors in the mortgage backed securities who didn’t do any due diligence. They were begging the banks to sell them this crap and the banks wouldn’t have issued these mortgages if there was no one to buy them.

    • ORPat says:

      Look we all know that some people shouldn’t have bought houses. The issue here is who really holds the mortgage. The loan originally is with bank A, sold to bank B. So far, okay. Then it is sold multiple more times and ends up being held by Bank Q. The Homeowner doesn’t know that their mortgage has ended up with bank Q. There of stories of people making payments for months to Bank D, then being foreclosed on by Bank Q because they haven’t made payments. There are stories of people who can’t get modifications because all the paperwork is so messed up no one knows who holds the paper.

    • Ramona_Little says:

      Maybe you’re trolling, but I’ll bite. This isn’t about whether people did the right thing taking out a mortgage and/or defaulting. This is about the fact that banks think they don’t have to follow state laws and court rules like everyone else, and they can take significant actions like grabbing someone’s house based on fraudulent paperwork. Say what you want about the homebuyers, but there’s no excuse for committing fraud against the court. If we let banks get away with it, then what’s the point of having laws and rules at all? Heck, let’s just let people claim ownership of whatever they want, who cares about paperwork. Yeah, I think I’ll go steal my neighbor’s car now . . .

    • mac-phisto says:

      i think maybe you need to re-read the article. the government isn’t helping people keep their homes, here. they’re requiring banks to follow the law when retaking property. this is in EVERYONE’S best interest. have you read about some of the foreclosure screwups lately like banks foreclosing on homes that they don’t have an interest in? that happens b/c the banks aren’t verifying the documents! THAT’S why the government is stepping in – so BOA doesn’t sell your house out from under you when you ARE paying your mortgage or own your house outright.

      don’t be a fool – the people who can’t pay will still lose their homes. this action will just ensure that people who can pay don’t also lose their homes b/c some greedy bankers half-assed their paperwork & foreclosed on the wrong house.

  3. gjones77 says:

    Everyone of you is missing something, the reason for the foreclosure issues isn’t a simple paperwork mistake, in many cases they don’t know where the title to these homes are…

    You see, when they securitized the debt into Mortgage Backed Securities they transferred the titles to the group holding those securities, but now no one knows where the titles went and if they were transferred properly since each state has different laws and most require “wet ink”, meaning real signatures on real paper, and most banks used an electronic filing system that the majority of states don’t recognize.

    Think about that, they’re trying to foreclose on homes they do not legally have the right to foreclose on, and it isn’t just regular banks, which only carry 1.3 Trillion in loans, no, we’re talking Freddy and Fannie too (you know, those 2 banks owned by us, the tax payers) which could man up to *best Dr. Evil impression* 6 Trillion dollars, you Trillion with a T, since they own a a large majority of the mortgage backed securities.

    So, what do you think happens if this all grinds to a halt and the markets realize that there is possibly 6 trillion in debt that no one can cover since no one knows who owes that money or owns the debt to begin with?

    Think the investors of these various banks are going to sit on their shares as they lose value, or are they going to sell those like scalper would world series tickets?

    No, you have no idea how badly we’re screwed, you have no idea…

    • Loias supports harsher punishments against corporations says:

      No, I have no idea what you just said.

    • c!tizen says:

      Dude, that’s kind of depressing for article with the Lego Justice League.

    • Karita says:

      This is almost exactly the same comment that’s been posted on a couple of articles from various vastly different news sources around the web today. I’m incredibly confused as to why someone would essentially be cutting an pasting such and incomprehensible jumble. The ideas are there, sure, and as someone who works in the field, I’m familiar with the issues. But WHAT IS UP with this weird comment?

    • SilverBlade2k says:

      To me, since *THEY* didn’t get their act together and create paper trailers to figure out who owns what, who owes what to who and what not, then *they* have no business operating, and if *they* are stuck with a 6 trillion dollar debt because of the mess *they* created, then it is not *our* problem.

      • gjones77 says:

        Oh, it most certainly is our problem, remember the crash back in 2007?

        That’s a blip compared to what this could cause.

        • Loias supports harsher punishments against corporations says:

          I think he means it’s not our financial responsibility. If a bank loses 6 billion because of lack of due diligence, then they should take the loss.

          If the 6 billion is in real estate, then this does not create the same crisis. Why? Because they aren’t losing money, they’re losing potential interest only, which is only a small percentage of that 6 billion.

          • Blueskylaw says:

            Do you think the banks will just “take” a loss, or will they pass on all costs and losses that their greed created in more and more creative fees?

    • Hobart007 says:

      Well said and accurate. My issue is that we have the government stepping in and playing to the populace in the short-term by doing something that will be crushing in the long run. Laws requiring ‘wet-ink’ are as out-of-date as the copyright law that is currently misused to muzzle anyone who speaks out against a company. The fact that a logical and industry-wide practice is turning into a storm this big is further proof that those who are ‘investigating’ these issues either know nothing of the industry and are shooting us all in the foot out of ignorance or are hopping on the bank-hating bandwagon to the detriment of us all. I believe that the bottom line is that whether or no we all hate banks, the economy is inextricably tied to them. The constant malignment and the resulting witch hunt mentality hurts everyone.. not just banks.

  4. Nighthawke says:

    Not all banks are cooperating though. Citigroup Inc. and Wells Fargo & Co. are not stopping their foreclosure factories stating they “did nothing wrong”.

    Feh, Good luck with that when the AG’s descends on their steel and glass towers with warrants by the bucket.

    • Powerlurker says:

      I for one, want to see perjury charges filed.

    • Bohemian says:

      Perjury, fraud, we need to see the people doing this being marched out in cuffs. At issue isn’t the home owners or even the possibly sketchy start to some of these loans. The problem is that these banks are foreclosing on homes without having the paperwork needed, without checking to see if the loan is even late or if they have the right to foreclose at all, then they are hiring people off the street to blindly sign these things on behalf of the bank claiming they reviewed the documents. This crap is being filed in the courts system.

      What worries me is that the banks hired some obviously unqualified people to just robo-sign papers instead of doing the research on these loans. I worry that they will be making these random people who just wanted a job the fall guys when some of them may not have really known how illegal and wrong what they were doing really was. Management needs to go to jail over this crap.

    • sonneillon says:

      Citigroup generally isn’t as retarded as GMAC or BOA. From my paperwork they follow the letter of the law, but Virginia allows non-judicial foreclosures and I only handle property preservation in NOVA.

  5. Loias supports harsher punishments against corporations says:

    OMG where can I buy this set!!

  6. evilpete says:

    You know all the gonna get is a slap in the wrist.

  7. MurderGirl says:

    Would it be cynical of me to suggest to California AG Jerry Brown that he wait until just before the election to announce a moratorium on all foreclosures in the state?

  8. CBenji says:

    I don’t know about you but I think it is all very strange how the economy can not be tanking on news like this. I mean I think this is a big deal yet the stock market doesn’t seem to take notice. To me I am really starting to wonder what is going on with that. It is seriously starting to freak me out a bit.

    And sorry, but I am not going to fault all the home owners here. I think that if this happened in a few areas of the country maybe this would be something to point a finger at people for being irresponsible, but this is an utter disgrace. Our money will probably soon be worth nothing more than Monopoly money at this rate. Anyone that doesn’t put the blame on the CEO’s & CFO’s can’t see the forrest for the trees. Obviously they were too busy collecting their bonuses to care about anything else.

    • Daemon Xar says:

      It means that the people who direct much of the movement in the stock market already knew about this, and adjusted for it over the last four years.

  9. psm321 says:

    Wow, all 50 AGs deciding to do this is pretty amazing

    • anewmachine615 says:

      Yeah, that surprises me. I’m not certain how often they ALL decide there have been questionable practices under each state’s separate laws, at least enough to merit investigation.

  10. KlausKinsky says:

    I thought it was only 49 states… Alabama did not join in.

    • enomosiki says:

      “The National Association of Attorneys General announced today that 49 states would be participating in the investigation, with Alabama the holdout. Alabama later joined the probe, even though ‘no violations of Alabama law have been alleged at this time,’ Attorney General Troy King said in an e-mailed statement.”

  11. enomosiki says:

    What about the improper foreclosures that have already occurred in the past four years? Are they going to look those up, too, or are they going to let it slide?

  12. mythago says:

    The reason it’s gearing up now is that a bunch of attorneys fighting these foreclosure actions released some interesting documents. Specifically, depositions (sworn testimony) from ‘robo-signers’ admitting they don’t know what they hell any of what they were signing means and they didn’t bother to read what they signed. You know, their signature being ‘proof’ that what was in the affidavits was true.

  13. Kryndar says:

    Time to lose nerd cred, although I was always more Marvel than DC but who are the three in the center of the bottom row, I feel like I should know the one on the left.

    • Caged Wisdom says:

      Top row, l to r: Green Lantern, Wonder Woman, Superman, Batman and Black Canary
      Bottom row, l to r: Hawkgirl, Black Lightning, Red Arrow (formerly Green Arrow’s smack-addicted sidekick Speedy), Vixen and Red Tornado.

      • Kryndar says:

        Aaaaah, yes should have known Black Lightning and Speedy, that old smack addict. Honestly don’t think I’ve ever seen Vixen before.

        • Caged Wisdom says:

          I hadn’t heard of Vixen until the Justice League Unlimited cartoon a few years back.

          If you have time to kill someday read about Justice League Detroit on Wikipedia or a comics history website. Horrible idea, inadvertently (at least I hope so) racist and just overall a low point for the JL.

  14. SilverBlade2k says:

    I think they are doing this now to prevent/slow down any oncoming lawsuits being filed their way due to improper foreclosures on property that they don’t even have.

  15. Torchwood says:

    Bravo to the AGs who are going after the banks and such who improperly handled the foreclosures. I know that something fishy was going on here.

    Having said that, why do I get the bad feeling that those who were subprime, got into fiscal trouble, and are about to be foreclosed upon will end up, thanks to the AGs, to be in better shape than those who followed the rules, managed to make the payment, and kept current on the mortgage?

  16. JohnDeere says:

    thats freaking awesome, im going home and painting my legos like the justice league.

  17. BurtReynolds says:

    I am amazed Virginia’s Ken Cuccinelli joined in. I thought he was tied up crusading against climate researchers, the EPA, and health care. Oh, and writing “legal opinions” on how the state is free (under state law) to discriminate based on sexual orientation.

    Take note, this guy is apparently the new “it” pol for the Tea Partiers in the mid-atlantic.

  18. webweazel says:

    I can hear the sound of a million shredders working overtime in the background…………

    I am going to follow this story. I want details! There’s something about huge companies that basically couldn’t find their asses with both hands, a flashlight, and a topographical map, thumbing their noses at the courts and getting a whole crapton of regulators and states pouring down on their heads that just fills me with a giddy glee. I hope heads roll. Often and many. I will celebrate with a beer for every bank guy who looks like a nose-picking bumbling dick on TV. And another beer for every robo-signer that gets interviewed on live TV with lots of gory details. Jail-time=kegger! I’m simply giggling with delight in anticipation of how this will unfold.