Posted on Wednesday, October 13, 2010
LOS ANGELES — Two big mortgage lenders are reviewing foreclosures as public officials heighten pressure on the industry over allegations that they made errors in documents used to evict homeowners.
GMAC Mortgage, a unit of Ally Financial Inc., said Tuesday that it has enlisted legal and accounting firms to conduct independent reviews of its foreclosure procedures in all 50 states. GMAC has already halted foreclosures in 23 states.
Separately, Wells Fargo & Co. said it would review pending foreclosures for potential defects in response to requests from lawmakers and public officials. The San Francisco-based company says it has not turned up any evidence of problems.
"We have no plans to initiate a foreclosure moratorium," company spokeswoman Vickee Adams said.
In May, a Wells Fargo executive acknowledged in a deposition that he verified only the dates on up to 150 foreclosure documents he signed daily.
The executive said he relied on co-workers to ensure that other information in the documents was correct.
Mortgage lenders have come under criticism as evidence has surfaced that they have been using flawed court papers to evict homeowners. That has led state and federal officials to ramp up pressure on the mortgage industry.
The special inspector general overseeing the financial industry bailout is investigating GMAC after an employee approved thousands of foreclosures without reading the paperwork. And attorneys general of up to 40 U.S. states are expected to announce a joint investigation into banks' use of flawed foreclosure paperwork as early as this week.
GMAC said it would separately review its foreclosure sales nationwide to ensure that the company followed procedures to prevent foreclosure, that the timing of the foreclosures was appropriate and that they were handled according to state laws.
But the company stopped short of a national foreclosure freeze. So far, only Bank of America Corp. has stopped seizing foreclosed homes nationwide.
GMAC is still initiating foreclosures. But it's stopped evicting homeowners and selling foreclosed homes in the 23 states that require judges' approval. GMAC said an internal review of its foreclosure cases in those states has found no evidence to date that the company has conducted any inappropriate foreclosures.
"We are taking these additional steps to restore confidence in the process, which is critical for the stability of the home and mortgage industry," the company said.
In addition to GMAC and Bank of America, JPMorgan Chase & Co. and PNC Financial Services suspended foreclosures amid evidence that bank employees falsely swore they had personal knowledge of a particular case, because documents could not be located or because of other paperwork problems.
Meanwhile, Bank of America has taken steps to ensure its foreclosure sales will continue to qualify for title insurance.
The lender reached an agreement with Fidelity National Financial Inc. that confirms Fidelity will provide title insurance on the sale of its foreclosed properties, said Dan Frahm, a spokesman for Bank of America Home Loans.
Title insurance provides protection to the homebuyer and mortgage provider in the case of any unpaid taxes, questionable ownership or other problems.
Experts have raised concerns that the allegations over foreclosure document errors could cast doubt over the true ownership of foreclosed properties, possibly triggering problems with titles and title insurance for people who buy foreclosed properties.
"Bank of America and Fidelity National are taking this step to facilitate the continued availability of title insurance that is vital to the marketability of foreclosed properties," Frahm said, adding that the bank is working with the title insurance industry's major trade group and other title insurers to reach a similar agreement.
Zibel Huffington Post