Just weeks ahead of the midterm elections, 49 out of 50 state attorneys general have opened an investigation, led by Tom Miller of Iowa, into foreclosure procedures across the country, based on evidence that banks are galloping through the process and leaving due process by the wayside.
The chief complaint that has surfaced to date concerns signatures that are written electronically or simply churned through a foreclosure "mill" where people sign documents they don't even read.
Reading takes time. When there are hundreds of thousands of foreclosure documents to read, that takes time and money. But it's not like banks don't have either of those. They have time. They have money. As someone pointed out, there are also plenty of people looking for work. Reading the documents properly does not seem implausible, let alone impossible.
It may not be very titillating to have a nationwide scandal based on banks failing to cross their t(s) and dot their i(s) on foreclosure documents, but the mistakes could prove costly. It isn't too much to ask that the actual lien holder pursue a foreclosure, for example, and in the flurry of buying and selling in financial markets, some courts have noticed foreclosures pursued by the wrong lender. In Florida, an attorney says his client was home minding her p(s) and q(s) when a bank representative came by to secure the home for the bank -- to change the locks, that sort of thing. Not expecting a visitor, she called 911. They'll have to sort that one out, too.
JPMorgan Chase & Co. is one of a growing list of major lenders that volunteered to suspend foreclosures while undertaking a review of its procedures. They have 115,000 foreclosure files to review, but Chief Executive Officer Jamie Dimon said during a conference call with investors that, "We don't think there are cases where people were evicted out of homes when they shouldn't have been," CNNMoney.com reported.
The New York Times reported Thursday that employees at JPMorgan Chase tagged the wet-behind-the-ears employees hired to process foreclosures as "Burger King kids," to indicate their lack of experience dealing with finances. Workers contracted by Citigroup and GMAC Mortgage to handle foreclosures "sometimes tossed the paperwork into the garbage," the Times said.
And then there are the matchbox cover law firms that jumped in on the action, at least one of which outsourced foreclosure processing to companies in Guam and the Philippines, the Times said.
Few would argue that the number of foreclosures have overwhelmed lenders who made a pile of profits when the housing market was sailing along before the financial crisis hit. Currently, banks are serving up defensive positions and apologetic ones, with some admitting they didn't gear up fast enough to handle the wave of foreclosures that turned into a tsunami of paperwork.
"We believe we responded appropriately to staff up to meet the increased volume," said Mark Rodgers, a Citigroup spokesman. Wells Fargo Home Mortgage co-President Michael Heid said, "When you think about what it costs to add 10,000 people (to handle foreclosures) that is a substantial investment in time and money along with the computers, training and system changes involved."
Jim Miller, former manager of several brand name mortgage servicing departments said simply, "I don't think anybody anticipated this thing getting as bad as it did."
Iowa's Attorney General Miller said, "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."
At a glance, of course, it appears that if 49 attorneys general signed up to rattle swords over the scandal, it must be an important case. It is clearly not a laughing matter. But just before a midterm election, it may be considered that 49 attorneys general signed on because it was also a softball. Banks appear cooperative and several volunteered to stop and assess the situation well before the attorneys general opened their investigation.
In international markets Thursday, Japan's Nikkei 225 index added 1.91 percent, while the Shanghai composite index rose 0.64 percent. The Hang Seng index in Hong Kong rose 1.68 percent, while the Sensex in India lost 0.92 percent.
In Australia, the S&P/ASX 200 gained 1.71 percent.
In midday trading in Europe, the FTSE index in Britain lost 0.08 percent, while the DAX 30 in Germany gained 0.59 percent. The CAC 40 in France rose 0.24 percent, while the Stoxx Europe 600 added 0.21 percent.
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