Thursday, October 14, 2010

Granholm to Nation's Top Lenders: Suspend Michigan Foreclosures

Uh, yeah. We'd better do that. When the NYT is running headlines like "Bankers Ignored Signs of Trouble on Foreclosures"...

As the furor grows over lenders’ efforts to sidestep legal rules in their zeal to reclaim homes from delinquent borrowers, these and other banks insist that they have been overwhelmed by the housing collapse.

But interviews with bank employees, executives and federal regulators suggest that this mess was years in the making and came as little surprise to industry insiders and government officials. The issue gained new urgency on Wednesday, when all 50 state attorneys general announced that they would investigate foreclosure practices. That news came on the same day that JPMorgan Chase acknowledged that it had not used the nation’s largest electronic mortgage tracking system, MERS, in foreclosures, since 2008.

... and stories of hairdressers robo-signing paperwork and indications are that this all has to potential to blow up into another TARP situation (which the taxpayers will NOT be happy about, to say the least), let's just take a timeout here and try and figure out the damage before we screw up the national economy again. Would that be OK with everyone?

Governor Jennifer M. Granholm yesterday called on the nation’s top lending institutions that service mortgages in Michigan to suspend all foreclosures pending investigation of possibly fraudulent foreclosure filings. The governor also repeated her call for the nation’s top lenders to fully participate in the Michigan’s Helping Hardest Hit Homeowners Fund to help homeowners avoid foreclosure.

“Given recent revelations by major lenders about possibly fraudulent foreclosure filings, I am calling on the nation’s largest lenders doing business in Michigan to immediately suspend all foreclosures, all sales of properties previously foreclosed upon, and all evictions of persons residing in homes foreclosed upon, pending an investigation by state officials,” Granholm said. “I am also calling on Ally Financial, Bank of America, Citigroup, JPMorgan Chase, PNC, and Wells Fargo to step up to the plate and fully participate in Michigan’s Hardest Hit Homeowners Fund to help Michigan families avoid foreclosure.”

In recent weeks, major lenders including Ally Financial, JPMorgan Chase, and Bank of America have acknowledged that certain employees, known as “robosigners,” had engaged in possibly fraudulent practices that may have been in violation of Michigan law. Examples of these practices include signing documents and affidavits used in foreclosure proceedings without proper review or personal knowledge of the facts, and filing documents that do not accurately reflect loan payments, charges, and advances.

And yes, it would be nice if these guys would fully participate in the Hardest Hit Fund - initial press reports indicated that they were doing just that, but you know how that goes.

Repeatedly, the governor has also called for the nation’s top lenders to participate in the Michigan’s Hardest Hit Homeowners Fund to help keep families out of foreclosure. In letters sent to Bank of America, Citigroup, JPMorgan Chase, PNC, and Wells Fargo, the governor urged them to join with the over 100 banks, community banks, and credit unions who are participating in the Hardest Hit Fund.

The governor also acknowledged JPMorgan Chase’s participation in one of three Hardest Hit programs, providing payment assistance to currently unemployed homeowners, but called on JPMorgan Chase to participate in the other two Hardest Hit programs. Those two Hardest Hit programs provide emergency rescue funds of up to $5,000 for homeowners who have fallen behind due to an involuntary inability to pay, such as a medical disability, and provide funds for principal reductions for homeowners who can no longer afford mortgage payments due to a reduced household income.

“These disconcerting revelations deserve your immediate attention,” Granholm wrote in her letter to the banks. “Accordingly, I look forward to your response by November 1, 2010.”

Perhaps they can't participate because they can't prove they own the homes in the first place? Who knows. Better hope that we can ward off what seems to be an impending disaster that will threaten the fragile economic recovery we are seeing. A double-dip recession at this point would be a horrible thing indeed.