Suthers to look at state foreclosures
Attorney General John Suthers is trying to make sure Colorado doesn’t see improper foreclosures because the necessary legal documents allowing them aren’t being scrutinized properly.
Responding to national reports that some large lenders on the East Coast weren’t certifying foreclosure documents as they were supposed to, Suthers said Friday he is looking into pending foreclosures in Colorado to see if the same thing is happening here.
Unlike Colorado, other states use the courts to oversee foreclosures, and those judges rely on bank workers who are supposed to examine and certify that each is proper, such as who actually holds the mortgage and has the right to foreclose, and by how much is the borrower in default.
But it turned out that because many of the banks were dealing with mountains of paperwork for thousands of foreclosures, those documents were being signed by people who didn’t actually examine them, Suthers said.
“Because of the thousands and thousands of foreclosures, these people were being deposed (in court) saying, ‘I got hired by Bank of America a month ago. Before that I was a clerk at Wal-Mart. I sign affidavits all day long,’ ” Suthers said. “They asked them, ‘By the way, what is a deed of trust?’ They would say, ‘I don’t know.’ These people are tendering sworn affidavits to the court that all this information’s true, and they were acknowledging they were not checking this information.”
Colorado is the only state that uses public trustees to oversee foreclosures, but Suthers wants to make sure the attorneys who are signing the necessary documents here aren’t doing the same thing that was happening elsewhere.
After weeks of denying it had any problems with its documents, Wells Fargo late last month acknowledged that nearly 55,000 foreclosures pending in 23 states required more documentation. The company, however, said there is no reason to believe any of them shouldn’t go forward, and it isn’t halting its foreclosure sales as a result.
Still, it was enough for Suthers and other attorneys general to be concerned.
Suthers said his probe subsequently raised additional issues, such as whether some improperly foreclosed mortgages are ending up in securitized pools that are being sold to unsuspecting investors, and whether home- owners are seeing their homes foreclosed even after agreeing to loan modifications with their lenders.
He said his office received about a dozen complaints from people in recent weeks about their homes being foreclosed despite signing loan-modification agreements with their banks.
“Reports have come in from all over the country that this is a very wide problem,” Suthers said. “That’s now become part of the discussions with the banks, and I think they’re going to have to come up with some assurances.”