DOW JONES NEWSWIRES
California's attorney general on Friday called for lenders to
halt foreclosures on homes within the state until the banks can
demonstrate that they are complying with the law.
Attorney General Jerry Brown, who is the state's Democratic
nominee for governor, said all lenders should halt foreclosures
until "they clear up this mess and ensure that the process is fair
and complies with California law."
The statement was made after Bank of America Corp. (BAC) earlier
Friday said it would opt to temporarily halt all foreclosures amid
criticism about documentation problems. Bank of America, J.P.
Morgan Chase & Co. (JPM) and Ally Financial Inc. last week had
already postponed foreclosures in 23 states where a court's
approval is required to foreclosure on a home.
At issue is the use by banks of "robo-signers," people who sign
hundreds of documents a day without reviewing their contents, when
foreclosing on homes. According to Brown's office, J.P. Morgan,
Ally and California lender OneWest Bank have admitted that
employees approved and signed foreclosure documents without first
fully reviewing the borrowers' loan files. As a result, some
borrowers lost their homes based on affidavits the bank never
confirmed were accurate.
Banks have been withdrawing affidavits signed by robo-signers
and dropping their cases against homeowners, with some consumer
activists saying they have more power to keep their clients in
their homes while negotiating for better mortgage terms. But the
legal battles and investigation could also prolong the foreclosure
process, which may deepen the housing crisis entering its fourth
year.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com