Bank Mortgage Foreclosure Fraud latest Villain in Troubled Economy

Michael Cerkas's picture

What began last month as a news headline has grown into a serious problem and is spreading like a plague over the U.S. economy as well as homeowners and citizens across the country. Ally Financial, the former GMAC (General Motors Acceptance Corporation), suspended homeowner evictions in 23 states after disclosing that its employees had submitted faulty affidavits to initiate foreclosures on an unspecified number of homes.

This month, JPMorgan Chase and Bank of America followed suit and likewise suspended evictions in the same 23 states after it disclosed knowledge of its employees that approved or ‘rubber-stamped’ foreclosure documents without reviewing or verifying the information on them.

In Ohio, State Attorney General Richard Cordray has filed suit against Ally Financial, Inc. (GMAC) for alleged fraud involving hundreds of mortgage foreclosures in the state. Cordray called the alleged fraud the “tip of the iceberg of industry-wide abuse of the foreclosure process.”

Concern over potential foreclosure fraud is spreading across the country

Other states including California, North Carolina, Texas, Massachusetts, Connecticut, Delaware and Maryland have also requested respective lenders to suspend foreclosure proceedings and allow investigative reviews of their lending practices.

In a just announced White House statement, President Obama will not be signing a recently passed bill into law. Officially known as HR-3808, ‘the Interstate Recognition of Notarizations Act of 2010’ will be returning to the House of Representatives. It was designed to remove impediments to interstate commerce by accepting electronic signatures as official notarizations from other states.

In light of the impending investigations into potential massive foreclosure fraud, HR-3808 would have only added fuel to the fire by making it easier to approve foreclosures without the due diligence of reviewing and verifying critical information on related documents.

Watch a Forbes Business News Report describing the mortgage foreclosure fraud here.

Add new comment