Cooper asks lenders to halt foreclosures in N.C.

He's concerned lenders signed documents without verifying info.

The Charlotte ObserverOctober 6, 2010 

  • Ally Financial, Bank of America, Wells Fargo, JPMorgan Chase, Citi Mortgage, SunTrust Mortgage, PHH Mortgage,OneWest Bank, PNC Mortgage, Aurora Bank, US Bank Home Mortgage, HSBC,MetLife Home Loans, BB&T Mortgage, American Home Mortgage Servicing.

N.C. Attorney General Roy Cooper is asking 14 lenders to suspend foreclosures in the state until they can show that their process complies with the law.

The move comes after three banks, including Charlotte-based Bank of America Corp., stopped some foreclosure-related actions in about half of the country after concerns that employees and outside lawyers signed documents without verifying information.

Last week, Cooper's office asked Detroit-based Ally Financial to provide information about its foreclosure practices in the state after the lender said it was halting evictions related to foreclosures in North Carolina and 22 other states as it conducts a review. Now the state is sending letters to 14 other lenders as it extends its inquiry, spokeswoman Noelle Talley said.

The foreclosure process varies from state to state. At issue are instances in which employees have said they have signed affidavits without verifying the information they contain. In other cases, questions have been raised about the notarization of the documents.

In a letter last week to Ally,Cooper's office said the use of unverified affidavits could constitute fraud. The attorney general's office has broad authority to investigate unfair and deceptive practices and can obtain injunctive relief and civil penalties, the letter said.

Last week, Bank of America said it was delaying foreclosures in 23 states, but not North Carolina, as it examines whether it rushed the foreclosure process for thousands of homeowners without reading the documents.

Cooper is "especially concerned that if foreclosure affidavits are being signed without proper review, then some North Carolina homeowners may not be getting a good-faith shot at loan modifications," Talley said.

Talley said the attorney general's office has had preliminary talks with Bank of America and Ally Financial, but it was premature to say more.

The 15 lenders being questioned by North Carolina are the largest mortgage servicers in the state.

A Bank of America spokesman could not be reached for comment.

Wells Fargo said Tuesday that it wasn't planning to initiate a foreclosure moratorium.

"Our affidavit procedures and daily auditing demonstrate that our foreclosure affidavits are accurate," the San Francisco-based bank said.

Cooper is one of many state and federal officials and lawmakers exploring problems with the foreclosure process.

House Speaker Nancy Pelosi and other California Democrats are calling for a federal investigation into the processing of foreclosures by some of the nation's largest lenders, according to The Washington Post.

Another key lawmaker, Sen. Robert Menendez, D.-N.J., is demanding that more than 100 mortgage companies determine whether foreclosure documents they approved contain errors and reveal their findings. He wrote to the three major lenders that have halted thousands of foreclosures - JPMorgan Chase, Bank of America and AllyFinancial - along with dozens of other companies. "I want to know how deep this problem goes and what safeguards are now in place to prevent unjustified rubber-stamp foreclosures from happening in the future," Menendez said.

Along with Sen. Al Franken, D-Minn., Menendez also requested that Congress' investigative arm, the Government Accountability Office, examine whether federal regulators overlooked problems at mortgage companies. They asked the GAO to recommend whether federal regulatory agencies should have more authority.

Sen. Jeff Merkley, D-Ore., has urged the Treasury Department and the Department of Housing and Urban Development to investigate.

Maryland Gov. Martin O'Malley, Delaware Attorney General Beau Biden and Texas Attorney General Greg Abbott have called on lenders to suspend foreclosure actions until they can ensure that banks have followed proper procedures.

The Associated Press contributed.

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