It’s about time. Foreclosures have been out of this world in California, and something just didn’t feel right about any of it. Last week the federal government stated it was beginning an investigation into the possibility that not only were many foreclosures improper, but possibly illegal. Last week, the California Attorney General’s office decided to join other state AG’s in an investigation of the process.
This isn’t a political ploy, although someone might think it is. Foreclosures have been rampant in many states, and many have wondered how they were able to do it so fast when it seemed they didn’t have the manpower to also approve new loans at that rate, especially when the federal tax credit was still available. It has been discovered that many financial institutions actually had people just signing off on paperwork without reading it to see if there were inaccuracies, and that’s not legal. It’s also not legal to make it a practice for a financial institution, and what the federal government is concentrating on are email transmissions that might have talked about making this policy, in which case they’ll charge companies with federal mail fraud, since it covers email as well.
JP Morgan and Bank of America have acknowledged there were errors, as have many other banks, but this week B of A decided their errors were just procedural and not so bad and have resumed foreclosure processes. Many other banks have stopped for the time being after a call by the federal government, including the White House, for a short moratorium, although no one was really obligated to do so.
This should prove to be interesting, but unfortunately it probably won’t help those who have already had their homes foreclosed upon, unless a class action lawsuit is filed. For those people, don’t hold your breath.
See also:
Edgewood at the Cove
State programs for First-Time homebuyers
Mitch writes on real estate, finance, and many other things.