Mortgage Crisis and the Renewed Call for Help
In early October, major banks and lenders announced they would temporarily halt foreclosures in some states due to administrative errors.
November 14, 2010
In early October, major banks and lenders announced they would temporarily halt foreclosures in some states due to administrative errors. Ally Bank, JP Morgan Chase, GMAC and PNC Financial halted foreclosures in 23 states where court supervision is required during the foreclosure process, while Bank of America stopped foreclosures in all 50 states to review its policies.One allegation facing the banks centered on the use of "robo-signers." According to The Wall Street Journal, robo-signing involved numerous bank employees who would sign hundreds of foreclosure documents in a day without reviewing or verifying information in the files. The employees also did not sign many of the documents in the presence of a notary public. A report in the New York Times notes that signers at Chase and GMAC would sign over 10,000 foreclosure documents a month.
Fifty State Investigation
Investigations on the state and federal level have caused many homeowners and lawmakers to push for major reforms in the mortgage lending and servicing industry. The Wall Street Journal notes that some members of Congress have even called for a moratorium on all mortgage foreclosures, a move which the Obama administration has not endorsed, citing the risks of going too far.
In October, attorneys general from across the United States announced they would form a task force and investigate mortgage lenders and servicers, pledging to stop any improper practices. At least 17 states have separate inquiries pending.
In Illinois, the state attorney general, Lisa Madigan, is preparing legislation to strengthen state foreclosure rules in an effort to protect consumers and hold banks more accountable. According to The Wall Street Journal, part of that legislation would also allow bankruptcy judges to reduce the amount of mortgage debt. Similar legislation is pending in other jurisdictions.
A provision of the recent financial reform package attempts to help struggling homeowners by authorizing government funds for legal services. The legislation also provides emergency relief to unemployed homeowners with reasonable opportunity for employment.
Getting Help
For many people, falling behind on a mortgage or other bills is a symptom of a larger problem. If you are facing foreclosure or experiencing other financial problems, it is important to discuss your concerns early on in the process. While bankruptcy may be one option, there may be other ways to avoid foreclosure and help save your home.
Article provided by Jeffrey D. Best Attorney at Law
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