Texas Attorney General Greg Abbott asked loan servicing companies on
Monday to suspend all foreclosure activities over concerns about the
accuracy of foreclosure documents.
In a letter sent to 27 companies that service mortgage loans in
Texas, Abbott's office demanded the immediate suspension of
foreclosures, selling foreclosed properties and evicting people living
in those properties.
The letter asks that companies obey the moratorium at least
through Oct. 15 â€” the deadline Abbott established for companies to
identify any employees who participated in unlawful practices and assure
the state that the targeted companies are following Texas laws.
The attorney general's office is investigating mortgage lenders
to determine the "full harm Texas homeowners have suffered," according
to a letter signed by Paul D. Carmona, the chief of the state consumer
protection and public health division.
"We will be pushing forward with our investigation and inquiry,"
attorney general spokesman Jerry Strickland said. "This is in the
interest of homeowners who are feeling the effects of foreclosures."
Other states are taking similar action. Maryland Gov. Martin
O'Malley supports a 60-day moratorium on foreclosures there. Delaware
Attorney General Beau Biden is calling on mortgage banks to suspend all
pending foreclosures until their policies are reviewed. And in
Massachusetts, Attorney General Martha Coakley said her office is
investigating an "apparent failure of major creditors to follow state
The Texas request comes after several companies, including Bank
of America, suspended foreclosures following revelations of
"robosigning," a practice in which bank employees sign thousands of
foreclosure documents a month without verifying their accuracy or even
reading them. Some of the court documents have proven to contain
inaccurate information or improper notarizations or signatures.
In his letter, Carmona described possible fraudulent practices by
lenders, including signing thousands of documents per months, often
without reading them; signing affidavits falsely claiming personal
knowledge of facts or falsely claiming the signing party reviewed
attached documents; and notarizing documents prior to their signing or
when the signer was not present.