Attorneys general from a significant number of states will announce a joint investigation into the nation's biggest lenders on Wednesday, but there are no indications of a moratorium on foreclosures in their jurisdictions.
The investigations will be undertaken in dozens of states including Maryland, Virginia, California, Indiana, and Ohio, among others, with an initial focus on Bank of America, J.P. Morgan Chase, Ally Financial and other major lenders as reports have emerged about them misleading their customers and making deceptive statements to expel borrowers from their homes.
Indiana Attorney General Greg Zoeller said the investigators will focus on industry employees, who are known as "robo-signers" for stamping every document for foreclosures. The investigators will look into reports that say that the employees signed off on thousands of foreclosures every month without analyzing and reviewing the documents, which is a major violation of law.
There are also reports and claims by homeowner attorneys that lenders forged signatures and ordered foreclosures on improperly notarized documents.
Charges of deceptive trade practices could be pressed against the violators if the investigations find faults with the foreclosure process. The investigators said they could use the findings' results to press lenders to modify loans for the troubled homeowners; a change in the policy that regulates the processing of foreclosures is also on the cards.
About two dozen states are currently leading the investigations but others are expected to join as the American housing industry is facing its worst crisis in 80 years.
Democrats have called for a freeze on foreclosures but President Obama has decided against that citing concern about a poor housing market recovery.
