Delaware AG Joins Cries For Foreclosure Freeze, As Mortgage Meltdown Moves Away From Just Judicial States
The populist chorus for a foreclosure freeze is now approaching 100 dB. The latest to join the fray is Delaware AG Beau Biden's, whose office, according to the AP, sent letters Tuesday asking three mortgage lenders
to suspend all pending foreclosures until the banks can review their
policies. While not all that surprising, this latest move is slightly peculiar as Delaware is not part of the 23 "judicial" states in which GMAC, JPM and BofA have instituted a voluntary foreclosure halt (for an analysis by Barclays of why the judicial states are mostly impacted, for now, click here). Per the AP, "the letter also asks Bank of America Corp., JP Morgan Chase & Co. and
Ally Financial Inc. officials to describe their foreclosure review and
verification process, and provide copies of Delaware homeowner
complaints about the foreclosure process, including concerns about court
documents that contained inaccurate information, improper notarization
or signatures to Biden's fraud and consumer protection division." Which means that as other AGs follow suit, the foreclosure halt will immediately expand from merely the 23 judicial states to all, especially since as Bloomberg just reported, "JPMorgan, Bank of America face "hydra" of foreclosure probes." We couldn't have coined a better visual if we tried.
More from the AP:
A Biden spokesman told The Associated Press on Monday that his office would request mortgage banks temporarily suspend foreclosure proceedings, but he clarified Tuesday that only three lenders would be asked.
The targeted lenders have halted tens of thousands of foreclosure cases elsewhere due to document verification issues.
In the letter, Biden's staff asks the companies to explain how they ensure that the information presented to the Delaware Courts is "complete and accurate" and provide a detailed description of why the bank has suspended foreclosures in other states. The Attorney General's office directs the lenders to return the requested information by Oct. 18.
Tom Kelly, a spokesman for JP Morgan, declined to comment.
Gina Proia, a spokeswoman for Ally Financial, declined to comment specifically on Delaware's request. Proia referred to a previous company statement that says bank officials are confident they have not inappropriately foreclosed on any borrowers and they are acting with urgency to resolve problematic issues in some places. The statement says a procedural error was found on some affidavits required in certain states.
Bank of America spokespeople did not immediately respond to a request for comment.
And here is a brief summary of all the moving parts in this rapidly deteriorating scandal which will blow holes in most mortgage servicers income statements and balance sheets:
Other states are taking similar action. In neighboring Maryland, Gov.
Martin O'Malley, Attorney General Doug Gansler and Rep. Elijah Cummings
sent a joint letter Monday to seven mortgage lenders, including three of
the firms targeted by Biden's office in Delaware, asking them to
similarly suspend foreclosure proceedings and review their procedures to
make sure foreclosures in Maryland were done properly. In Texas,
Attorney General Greg Abbott asked 27 loan servicing companies on Monday
to suspend all foreclosure activities over concerns about the accuracy
of foreclosure documents.