Iowa attorney general asks 3 mortgage companies to halt foreclosure proceedings pending probe

By Mike Glover, AP
Thursday, October 7, 2010

Iowa atty general seeks to halt foreclosures

DES MOINES, Iowa — Iowa Attorney General Tom Miller is calling on three large mortgage companies to halt foreclosure proceedings in the state while he investigates problems with documents filed with the courts.

At a news conference Thursday, Miller said his office has contacted Ally Financial’s GMAC Mortgage unit, Bank of America, and JPMorgan Chase to urge the companies to suspend foreclosure proceedings as well as evictions and sheriff’s sales in Iowa.

A furor has been growing as mounting evidence has surfaced that mortgage lenders have been evicting homeowners using flawed court papers. State and federal officials have been ramping up pressure on the mortgage industry over concerns about potential legal violations.

Attorney General Eric Holder said Wednesday that the government is looking into the issue. And in a letter Tuesday, House Speaker Nancy Pelosi and dozens of Democratic lawmakers urged bank regulators and the Justice Department to probe whether mortgage companies violated any laws.

Ally, JPMorgan Chase & Co. and Bank of America Corp. have halted some foreclosures in 23 states — including Iowa — after evidence surfaced that their employees or outside lawyers signed important foreclosure documents, including affidavits, without reading them or filed inaccurate paperwork.

Even though the companies have agreed to halt some foreclosures in Iowa, officials there believe that the problem is serious enough that the three banks should put a definite stop to seizing borrowers’ homes.

“We have admissions that was done in a sort of mass production, almost manufactured, basis,” Miller said. “This is contrary to Iowa law.”

Miller heads a 13-state group that deals with foreclosure issues, and he said Iowa would take the lead in coordinating the latest effort. The law requires that those signing the affidavits have personal knowledge of a foreclosure proceeding, Miller said, but it appears that often wasn’t the case.

He said he’d expand his inquiry to see if other companies used the same improper procedures. Iowa staffers will coordinate their efforts with other states that have taken similar steps and the federal government, Miller said.

Miller said his office will examine the operations of other companies and he urged any “with anything less than absolute confidence in its internal foreclosure review procedures” to also halt foreclosures.

On Wednesday, Ohio Attorney General Richard Cordray filed a lawsuit against Ally Financial, alleging it committed fraud that may have involved hundreds of foreclosures in the state. In response, Ally said it has been working to fix “procedural mistakes.”

Iowa’s foreclosure rate is actually far lower than in much of the country. As of June 30, about 9 percent of the state’s homeowners who have a mortgage had either missed at least one mortgage payment or were in foreclosure, according to the Mortgage Bankers Association. That compares with about 14 percent nationally.

A spokeswoman for Ally declined to comment on the Iowa announcement. Chase spokesman Thomas Kelly said his company is going over documents it has filed in current foreclosure proceedings. “We anticipate this should be complete in a few weeks,” he said.

Bank of America spokesman Dan Frahm issued a statement Wednesday night addressing state requests for foreclosure halts. “Our initial assessment findings show the factual loan information underlying our foreclosures is accurate,” he said.

AP Business Writer Alan Zibel contributed to this report from Washington.

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