On Wednesday, October 13th, a group of attorneys general and bank regulators from all 50 states and the District of Columbia announced a coordinated probe into potentially improper foreclosure practices of various national lenders. At the heart of these investigations are allegations that some banks used erroneous or incomplete paperwork in foreclosing on residential mortgage loans. Getting particular attention is the alleged practice of using “robo-signers” to sign foreclosure documents without reviewing the background materials and loan documentation.
According to news reports, it is not expected that many individuals will regain homes they lost to foreclosure even if improper steps were taken.
Economists speculate that these investigations and the related internal reviews of foreclosure procedures by various lenders could have the short-term effect of temporarily propping up residential housing prices but the long-term effect of prolonging the housing downturn by delaying the inevitable.
Photo by Casey Serin (flickr).