The ITT List
Iowa Attorney General Promises to ‘Put People in Jail’ Over Fraudulent Foreclosures
by Andy Donakowski
A scandal erupted last September when it was revealed that many large banks were cutting corners and “rubber stamping” paperwork in foreclosure proceedings for many homeowners. The result of such shoddy foreclosure practices led to wrongful evictions of many individuals and families from their homes.
Several banks halted the evictions and began reviewing foreclosure proceedings from their own employees. But when public furor over muddled foreclosure proceedings died down, many banks resumed the evictions.
Now, Iowa Attorney General Tom Miller is promising some action. Miller is leading a group of attorneys general from all 50 states investigating foreclosure practices. The group has met with leading mortgage servicers to discuss a possible settlement over the allegations of the illegal evictions. In addition to significant principle rate reductions, loan modifications and compensation for individuals wrongfully evicted from their homes, on Tuesday Miller told a group of 100 concerned homeowners from 15 states he would seek prosecution of those responsible for the fraudulent paperwork.
“We will put people in jail,” Miller said in response to questions from the audience.
Miller seeks to assist homeowners who may be faced with a rapidly approaching foreclosure—as many who apply for a mortgage modification later find out the foreclosure process starts the same time as the modification. “It shouldn't be that way,” Miller told the homeowners in Des Moines. "To have a race between foreclosures and modifications to see which happens first is insane."
Since the Obama administration launched its foreclosure-reducing effort, the Home Affordability Modification Act, fewer people have received modifications than have been “bounced” from the program, according to federal auditors. Additionally, many who apply for modifications from the HAMP Act face hurdles from borrowers who drag their feet or falsely deny applications. Some have even found the program causes them to lose their home by saddling the homeowners with further debt.
The words from Miller were met enthusiastically from those in attendance.
"We are very pleased with how this meeting turned out, and now our expectations are higher than ever," said Deacon Mike McCarthy, a member of Iowa Citizens for Community Improvement.
"We got heard today and we've got a champion," said Gina Gates, a homeowner from San Jose who attended the Des Moines event where Tom Miller spoke.
It will be interesting to see how far Tom Miller and other Attorneys General can go in prosecuting those responsible for the illegal foreclosures.