Lawmakers look into foreclosures

WASHINGTON – More than 30 House members from California are calling on federal regulators to investigate whether mortgage companies broke the law by using paperwork that may have contained errors.

The Democratic lawmakers, led by Rep. Zoe Lofgren and House Speaker Nancy Pelosi, urged bank regulators and the Justice Department to probe whether mortgage companies violated any laws in handling foreclosures and borrowers’ requests for loan assistance.

“It appears that we aren’t dealing with isolated incidents and that a pattern of misconduct and obstruction is present,” Lofgren said.

Three banks have halted foreclosures in 23 states after evidence surfaced that their employees or outside lawyers signed documents without reading them. Numerous state and federal officials have been ramping up pressure on the mortgage industry over concerns about potential legal violations, including signing documents without reading them and filing inaccurate paperwork.

“I want to know how deep this problem goes and what safeguards are now in place to prevent unjustified rubber-stamp foreclosures from happening in the future,” Sen. Robert Menendez, D.-N.J., wrote to the three major lenders that have halted thousands of foreclosures – JPMorgan Chase, Bank of America and Ally Financial.

Along with Sen. Al Franken, D-Minn., Menendez also requested that Congress’ investigative arm, the Government Accountability Office, examine whether federal regulators overlooked problems at mortgage companies. They asked the GAO to recommend whether federal regulatory agencies should have more authority.

Massachusetts Attorney General Martha Coakley called on the same three lenders – plus Wells Fargo & Co. – to halt foreclosures. That state is not affected by the foreclosure freeze because it does not require judges to approve foreclosures.

But Coakley noted that lenders still must give borrowers official notices before a foreclosure is complete.