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California Lawmakers Call for Mortgage Foreclosure Investigation

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House Speaker Nancy Pelosi, Rep. Zoe Lofgren, and other California Democrats are calling on the Obama administration to investigate charges that some of the nation's largest mortgage lenders systematically mishandled thousands of home foreclosures.

In a letter Monday to Attorney General Eric Holder, Federal Reserve Chairman Ben Bernanke, and U.S. Comptroller John Walsh, the lawmakers urged the officials to look into allegations of improper foreclosures conducted by Bank of America, J.P. Morgan Chase and Ally Financial, The Washington Post reported.

"We urge you and your respective agencies to investigate possible violations of law or regulations by financial institutions in their handling of delinquent mortgages, mortgage modifications, and foreclosures," the letter said, adding that there are "concerns that systemic problems exist."

Meanwhile another Democratic lawmaker wants to know why regulators didn't discover foreclosure problems sooner.

The Post said Sen. Robert Menendez (D-N.J.) has asked the Government Accountability Office to investigate "the role of all government entities -- including federal regulators involved in overseeing mortgage servicing companies and affiliated banks -- and identify any regulatory problems that may have permitted this misconduct to occur without detection until now."

Filed Under: Nancy Pelosi, Economy

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Linda

My husbands great grandfather started a bank back east, years ago. Everyone in the family was given stock. For years it prospered, a small bank in a cloistered area - when all the issues about the banks started to arise, and the Feds started looking at banks, this is the truth....they went into this small-successful bank, and looked at their books. They told them they had to increase their asset/debt ratio ( they were not operating in the red--remember stockholders were getting dividends) and they gave them a short time frame ( little over 30 days if I remember correctly...this was just this past spring) to do that, and told them if they didn't they had to SELL the bank. Well, they responded they could raise the ratio's, but not in the short amount of time allotted. Guess what happened? Not enough time to do so... The bank was taken over by some other bank in upper New York. Share holders were given one share of the "new" stock for every TWO they held in the original bank. The Feds apparently have the right to go in and ORDER a bank to sell out to another larger bank, in actuality, force them to do so, even if the bank is successful...it's just a small bank so I guess that makes it not valid...BIG banks are slowly eating up the smaller banks...even if they are holding their own in this economy. The Feds don't seem to want smaller banks to succeed...not to mention what they expect from the Bigger ones...who knows.... Maybe they don't want to oversee the smaller banks, I don't know, but I certainly don't think it is right for them to do that.

October 06 2010 at 11:19 AM Report abuse +1 rate up rate down Reply
JC

Any call for an investigation into government's role in the housing crisis? I strongly suggest that mortgage lenders refuse to cooperate until such an investigation begins.

October 06 2010 at 11:18 AM Report abuse +1 rate up rate down Reply
Linda

On my local radio I heard the story of a family who was up agaisnt foreclosure. They "took advantage" of a program to "save their home". The monies seemed to have disappeared, the title company didn't know where it went, the loaner didn't know where it went. They just told the home owner they were still in foreclosure. Come to find out, the money was deposited, and quickly removed by "European Criminals" and deposited in out of country banks...The FBI is supposedly involved in this...meanwhile that family IS losing their home. Anyone who could do anything, don't seem to care about them, and maybe not about the missing money either because they don't know WHAT to do...just take the house back..... Computer hacking, Electronic money transfers....it's happening folks. It isn't in the media as it should be, it is "easier" to keep a single families under control when, while there maybe thousands of them in this position--they can control it better...less people find out about what is happening... By the way, they reported that the "European Criminals" are Russian. Just what I heard on the radio when this woman called in.....not saying true or false, but I doubt she would be calling a Consumer Advocate Program for help if she was making it all up.....

October 06 2010 at 11:07 AM Report abuse rate up rate down Reply
Dave

All of this "investigation" is happening just before the November elections? Gee, I wonder why all of a sudden there is so much interest by a political party who, in the past, could care less? The state of California has been run by the Democrats for decades and they have basically ruined the State. A State that used to be envied by the rest of the country for its technology and innovation, its superior school system, its advanced infrastructure, and its beautiful climate, is now one of the worst states in all of these areas. The state is going bankrupt, the infrastructure is falling apart, its schools are rated near the bottom of all states, businesses are leaving the state in groves, the tax structure is one of the most punitive in the country, and, what is the state government trying to do now? Legalize marijuana so that they can pay their bills. And, to top it off, Pelosi, Boxer, Waxman, and all of the Democrats in the state legislature that run the state, just keep getting re-elected. How stupid is that?? So do not overreact to this "investigation"..it is probably just an effort to boost their voting support looking to the near term election.

October 06 2010 at 10:57 AM Report abuse +4 rate up rate down Reply
Linda

You mean to have us believe that NONE of this was known BEFORE now? I do NOT believe it. I THINK THEY ALL KNEW. I THINK they ALL had their hand in the "POT" and took whatever they were offered. The American people were SO HOODWINKED and LIED to on top of all the CHEATING going on. This mortgage problem is by no means "FIXED" . WHY are they asking that only a few of the banks be investigated? THEY ALL SHOULD BE--especially if they dealt and now deal in Mortgage loans. What the h? THIS is the HUGEST wake up call to the hard working people of this country ever...IF they will CHEAT you on your mortgage--your home--your sanctuary in this mad world, what ELSE have they done? Banks, Congress, All those brokers on wall street...who were ALLOWED to walk away with hugely inflated wallets and portfolio's while all those people LOST THIER HOMES. Again, WHAT THE H??? I, for one, will NEVER vote for an encumbant again. The people of this country are going to be the ONLY ones who SEARCH for and FIND the truth because none of those others are going to admit ANY WRONGDOING. And even if they did, they will WALK out the door without one iota of punishment deserved. I'm sick of it.

October 06 2010 at 10:52 AM Report abuse +3 rate up rate down Reply
rickyncin

I find it amazing that the persons in charge of the issues have ABSOLUTELY no experience with the subject matter!! Let's give the banks BILLIONS of dollars to help the poor guys out of the tanking real estate mess!! Who was actually helped? THE BANKS...not the homeowners scammed into the loans, or the homeowners overtaken by greed obtaining negative amortization loans, not the senior citizens conned into reverse mortgage loans, nope THE BANKS. Let's consider this scenario: You have a Real Estate/Lender/Financial savvy person placed in charge of this mess. You allocate billions of dollars to help out the banks AND the homeowners. Instead of foreclosing and acquiring the totality of the bad debt, HOW ABOUT, you set aside a portion of those bailout funds for the Banks, have them re-write, re-amortize the debt based on current value and allow the homeowner to keep the home, pay the reduction by means of the bailout funds and voila! Everyone is fairly dealt with...of course there are homes that were just scam purchases and those should be thoroughly investigated. The Democrat control approved NoDoc loan programs, which means if you could find a CPA to write a letter that you made lots of money as a self employed person you could buy a million dollar house at age 19!!!! WTH the Lenders didn't blink as long as the criteria was met and the Borrower signed the papers!!! Yeah, why are we truly in this mess??? Greedy Government!!! Make as many loans as possible, close the deals and on paper you are STELLAR! I have personal experience in dealing with REO Lenders, they would rather let the property sit vacant and continuously vandalized than take a moderate offer and get them off the books. They would rather punish the homeowner and not make any consideration of repurchase, then turn around and accept an Investor offer of $30,000.00 less. I know for a fact there are thousands upon thousands of homes in Lender Inventory that cannot be offered for sale. Why? The Obama Initiative!!!! Hold them all, give the appearance of a stabilizing economy, let everyone buy now and interject the fear that prices are actually increasing, create a bidding war frenzy to up the price and BAM, release the inventoried houses and see how badly you have been screwed when the "deal" you got isn't worth half of you neighbors house! Oh, and let's not forget the unemployment of everyone in the real estate related industry who are now out of work because the Lenders are forced to hold their inventory! Senator McCain gets it and fights for it, when will everyone else wake up!!!!!

October 06 2010 at 10:42 AM Report abuse +3 rate up rate down Reply
kymeee99

WOW, how they stoop so low, trying to buy more votes with more weak to fake promises, to real people! This is just as bad as the POT/WEED bill, as they try every way they can to hang on, and to swing CALIFORNIA! Only, to draw in more sucker votes, to their side. Why didn't they investigate mortgages way back when? This is just another rouse, a ploy people! I think we need to Vote all the lifers out of office, BOTH parties, so the PEOPLE can get to the REAL TRUTH, of what is really going on!!

October 06 2010 at 10:28 AM Report abuse +5 rate up rate down Reply
ksmwtm

Why does the FED chairman & the US Comptroller even have to request an investigation?

October 06 2010 at 10:17 AM Report abuse +4 rate up rate down Reply
Margit

The dems asking questions of the government regulators....boy that's a switch. I recall when the regulators attempted to tell the dems about the housing problems with Mac and Fanny and the regulators were horse-whipped for implying there was any wrong doing (barney frank, et al). Times have changed now that their heads are on the chipping block.

October 06 2010 at 10:09 AM Report abuse +4 rate up rate down Reply
foreqtew

One thing you will NOT see any govt at any level calling for? An investigation into the tax valuation assessment scandals all over the country. Home and property values have plummeted and where are the reassessements? when things were going up, government authorities just could not wait to increase their revenues... but now that values are down...where is the fairness? If there is not a real reduction in assessed values, and if folks get behind on their ad valorem taxes, and the government seizes the real property and sells it for back taxes, isn't that a prohibited taking of personal property??? Gotta be. I know the Federal govt is entirely or almost entirely uninvolved with real property taxes, but if they are going to investigate private lenders, they should at least highlight this potentially even worse problem.

October 06 2010 at 9:44 AM Report abuse +4 rate up rate down Reply
1 reply to foreqtew's comment
ksmwtm

Florida has a "Save Our Homes" law that limits increases in personally occupied, residential, homesteaded homes to I think 3% a year. My assessment is almost 1\2 of last years & about 60% of what the original purchase was 30 yrs. ago. At the peak of home prices, homes in the neighborhood sold for 5 times current property assessments. Florida has no income tax. The housing bust & lower tax revenues has governments (residents) in a bind.

October 06 2010 at 10:03 AM Report abuse rate up rate down Reply

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