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More than 2/3 of state attorney generals are set to conduct a joint probe into allegations that some lending institutions used fraudulent documents to kick out mortgage lenders from their homes.
Bank of America, among the leading mortgage providers, said it would temporarily stop its foreclosure efforts to check these reports as well. It is the first bank to do so in all the states.
JP Morgan Chase & Co and GMAC Mortgage of Ally Financial Inc. are temporarily suspending foreclosure in 23 states. GMAC Mortgage is 56.3% owned by the American government after participating in a bailout program for $17 billion. Accordingly, the employees in charge with foreclosure submitted affidavits to judges containing unverified information.
Nevada Senator Harry Reid called for a national moratorium on foreclosure after Bank of America made its announcement. The state of Nevada has one of the highest foreclosure rates in the United States. According to an anonymous source, the investigation of the attorney generals on the allegations, spearheaded by Tom Miller of Iowa, will be due by Monday so an announcement is expected by Tuesday.
Although the joint investigation does not include a moratorium, some attorney generals have already initiated individual efforts in their respective states. According to U.S. Attorney General Eric Holder, the Justice Department is investigating the widespread allegations of fraudulent documents. White House adviser David Axelrod indicated that President Barrack Obama is not supporting a national moratorium but wants an immediate solution to fraudulent foreclosures.
David Stevens, Commissioner of the Federal Housing Administration, supported the stand of the Federal Government saying that implementing a national moratorium is not the proper action at this time. A record 1.2 million homes will be handed over to banks this year. This reflected an increase from the 1 million in 2009 and 100,000 in 2005, according to figures released by Realty Trac, a real estate data company, in September.
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