State regulators offered some comfort and relief Wednesday to homeowners who have faced foreclosure.
And some foreclosure processors might have reason to worry.
State Attorney General Rob McKenna and Department of Financial Institutions Director Scott Jarvis said at a Seattle news conference that there are indications trustees charged with overseeing foreclosures might have neglected their duty to the law.
“As part of our ongoing investigation, we have received complaints and information that indicate the Washington foreclosure process frequently includes inaccurate documents, conflicts-of-interest, faulty chains of title, and failures to provide the disclosures and conduct mediations required by law,” McKenna said, according to a release.
“Some of these practices can deprive homeowners of their legal right to assert legitimate defenses in an action to save their homes,” he said.
The alleged problems, he said, are not limited to national banks and those who service mortgages; they also extend to foreclosure trustees.
McKenna and Jarvis announced they have joined attorneys general and banking regulators nationwide to form a multi-state group to investigate whether mortgage servicers have improperly submitted affidavits or other documents related to foreclosures, according to a DFI release.
“The last thing we need in these difficult times is to further damage our already-struggling real estate industry,” Jarvis said.
He warned that the consequences of the scandalous foreclosure behavior might affect subsequent buyers of foreclosed property as well as future lenders and title insurance companies.
Employees of several major lenders recently acknowledged in depositions that they signed thousands of foreclosure documents without reading them, as required by state laws.
“This is not simply about a glitch in paperwork,” Iowa Attorney General Tom Miller stated Wednesday. “It’s also about some companies violating the law and many people losing their homes.”
State officials, not the federal government, enforce foreclosure laws, which vary by state. Not all attorneys general have identical powers to investigate. Without clear evidence of a crime, they usually file lawsuits to force businesses to stop actions or to pay damages to wronged consumers.
The filing of false documents in court can be prosecuted as perjury. Any lawyers involved in improper foreclosures could suffer sanctions or lose their law licenses for unethical activity.
As part of their nationwide probe, state officials will be able to issue subpoenas to extract potentially incriminating documents from the industry.
The new group – the Financial Fraud Enforcement Task Force – intends to stop improper mortgage practices, review suspicious practices, evaluate remedies and establish a way to monitor future foreclosure practices.
C.R. Roberts: 253-597-8535 email@example.com
The Associated Press contributed to this report.