Californian Democrats in the House of Representatives are seeking a federal investigation into the handling of home foreclosures during the housing crisis.
Lawmakers in the House are asking for the investigation to discover whether financial institutions broke any laws during the housing process, after cases have come to light of practices by financial institutions which lead to home foreclosures which otherwise may have been avoided.
In a letter to the Attorney General and Federal Reserve Chairmen on October 4, the Californian House Representatives stated that they had received thousands of reports from home owners which amount to an “apparent pattern” of malpractice which lead to unnecessary foreclosures.
"The excuses we have heard from financial institutions are simply not credible three years into this crisis. People in our districts are hurting…it is time that banks are held accountable for their practices that have left too many homeowners without real help,” the letter stated.
The reports from home owners detail cases where financial institutions "routinely fail to respond in a timely manner, misplace requested documents, and send mixed signals" as to what the home owners should do to avoid foreclosure. There were also reports that efforts by home owners to seek modifications in loan terms or other relief were met with similar responses.
This comes on the back of Texas halting foreclosure proceedings until practices are reviewed, and financial giants Ally Financial and JP Morgan Chase being investigated in another six states for malpractice during foreclosure approval proceedings.
