JPMorgan Chase & Co., Bank of America Corp. and Ally Financial Inc. are defending allegations of fraudulent home foreclosures from customers, several attorney generals and Congress.
Authorities in at least seven states are probing whether lenders used false documents and signatures to justify hundreds of thousands of foreclosures, and the number of these inquiries will grow, according to state officials and legal experts.
Homeowners in multiple lawsuits claim lenders have been using falsified documents to foreclose on homes, at times when they don't even hold titles to the properties.
We have all known for awhile that the mortgage industry was engaged in some sloppy if not fraudulent tactics when foreclosing on properties. But the latest round of lawsuits and the congressional inquiry into what may prove to be an industry wide practice could cost many banks, servicers and other players in the mortgage industry lots of cash.
First of all, the three banks mentioned above have already put a halt to some foreclosures in 23 states, including Texas and if the attorney generals find that they were engaged in falsifying documents so that they could proceed with a foreclosure, they could face hefty fines, which could be thousands of dollars per incident of fraud. Technically there could be several incidences of fraud for each foreclosure, causing the mortgage lender to rack up millions of dollars in fines if the numbers of fraudulent foreclosures are as high as some suspect. And that is not including the money that homeowners could win if they decide to sue because they lost their home to a fraudulent foreclosure. Under the law, homeowners have the right to sue and win damages if they were the victim of a foreclosure by fraud.