49 state AGs announce broader investigation into mortgage servicing industry
On Wednesday, 49 state attorneys general offices and regulators announced a coalition to investigate lenders that filed faulty foreclosure affidavits. The only AG office missing from the list of this coalition is Alabama. Bank of America (BAC), JPMorgan Chase (JPM), Ally Financial (GJM), Goldman Sachs' (GS) Litton Loan Servicing, [[PNC Financial]] and OneWest Bank have each either began a review of documents or suspended foreclosure sales in at least 23 states where employees signed affidavits without reviewing the documentation or having a notary present. BofA suspended foreclosure sales in all 50 states, and Ally began a review of all its foreclosures cases across the country. Several state AGs announced investigations and even formal lawsuits against the lenders, while governors and members of Congress called for state and nationwide moratoriums. The New York State Banking Department also joins the 49 state attorneys general and 37 banking and mortgage regulators as part of a multi-state group that is investigating the foreclosure practices of mortgages servicers throughout the country. JPMorgan Chase expressed confidence Wednesday morning that problems in its foreclosure process were minimal. The coalition was put together and led by Iowa AG Tom Miller, who began finalizing the list yesterday. "This group has the backing of nearly every state in the nation to get to the bottom of this foreclosure mess, and we plan to work together as thoroughly and expeditiously as possible," Miller said. "Since this issue affects peoples’ homes and has clear economic implications, this probe and its outcome need to be fair both to homeowners and also to lenders." A spokesperson for Miller's office told HousingWire a co-operation among this many state AG offices is extremely rare. "In order to handle this issue in the most efficient and consistent manner possible, the states have formed a bi-partisan multistate group to address issues common to a large number of states," according to an announcement form the National Association of Attorneys General. The group will review the mortgage servicers to find out if they have submitted affidavits in accordance to state law. “I will not allow New Yorkers to lose their homes due to mortgage Goliaths that buck the system by submitting affidavits signed without knowledge of the facts,” said New York AG Andrew Cuomo when announced his investigation Tuesday. James Tierney, a former Maine AG, said the recent allegations into the problems at mortgage servicing shops highlights a need for tighter scrutiny on the state level. “This behavior is consistent with the ‘tin ear’ shown by some lenders to state law enforcement," Tierney said. "They’ve tried in both the Supreme Court and Congress to get rid of state consumer protection laws regarding lending practices but have failed. The attorneys general are now appropriately attempting to determine the truth in order to assure state laws are followed and to get the housing industry back to profitability." Bank of America, Ally Financial and JPMorgan Chase said each would cooperate with previously announced investigations but did not immediately respond to this one. At the third quarter earnings conference call this morning, JPMorgan Chase executives said they would pay penalties where it was necessary and fight back where they think they were right. Ally Financial responded to a recent lawsuit from Ohio AG Richard Cordray, saying nothing was fraudulent or deceitful about GMAC Mortgage’s practices. Write to Jon Prior.