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Lawmakers Call for Federal Foreclosure Investigation

House Speaker Nancy Pelosi and fellow members of the California Democratic Congressional Delegation are petitioning federal regulators and the U.S. Department of Justice to launch a formal investigation into servicers' foreclosure practices.


Prompted by the recent reports of systemic mishandling of foreclosure affidavits by three major mortgage servicers â€" namely ""GMAC Mortgage"":http://dsnews.comarticles/analysts-weigh-in-on-gmacs-foreclosure-snafu-2010-09-28, ""JPMorgan Chase"":http://dsnews.comarticles/jpmorgan-halts-foreclosures-robo-signers-appear-commonplace-2010-09-30, and ""Bank of America"":http://dsnews.comarticles/bank-of-america-suspends-foreclosures-in-23-states-2010-10-01 -- the group sent a letter Tuesday to Attorney General Eric Holder, Fed Chairman Ben Bernanke, and Comptroller John Dugan demanding a federal probe to determine if financial institutions have violated laws or regulations.

Delegation members say they have received thousands of complaints from their constituents, which ""appear to outline a clear pattern of misconduct on the part of lenders and servicers.""


On top of the alleged documentation fraud, the lawmakers assert that servicers and lending institutions are still ""routinely failing to respond in a timely manner, misplacing requested documents, and misleading both borrowers and the government about loan modifications, forbearances, and other housing related applications.""

The group offered up a ""20-page document"":http://lofgren.house.gov/images/stories/pdf/housing_cases_-_california_delegation_10.4.10.pdf of specific cases in California, which illustrate how banks have repeatedly misled and obstructed struggling homeowners from receiving the assistance they need.

""It's clear that even after promising to work with borrowers, and receiving government incentives to do so, financial institutions are simply stringing the American people along,"" said Delegation Chair, ""Rep. Zoe Lofgren"":http://lofgren.house.gov/index.php?option=com_content&task=view&id=605&Itemid=89. ""The excuses we have heard from financial institutions are simply not credible three years into this crisis. It is time that banks are held accountable for their practices that have left too many homeowners without real help.""

The lawmakers say they are ""particularly perplexed"" by the behavior of lenders and servicers in light of the many incentives Congress and the Obama administration have offered to these companies to avoid foreclosures where financially viable, including subsidies and loan guarantees from taxpaying homeowners.

The California Democratic Congressional Delegation consists of 34 Democratic members of the U.S. House of Representatives from California. This group outnumbers all other state House delegations - Republicans and Democrats combined.