California, Nevada join forces to probe banks' mortgage policies

At last, it's about time. Will other states take the action, too? BBB

December 6, 2011
California, Nevada join forces to probe banks' mortgage policies
By Rick Daysog | McClatchy Newspapers

SACRAMENTO, Calif. — California and Nevada, which suffer the highest foreclosure rates in the country, will team up to investigate whether the nation's largest banks used abusive mortgage practices.

California Attorney General Kamala Harris joined Nevada Attorney General Catherine Cortez Masto in Los Angeles on Tuesday to announce the alliance, saying it will speed along dual investigations in the states, both among the nation's hardest hit by the mortgage crisis.

"The mortgage crisis is a manmade disaster that has taken a heavy toll on the country, but it saved its worst for California and Nevada," said Harris. "The mortgage crisis is a law-enforcement matter, and we will prosecute to hold accountable those who are responsible and also protect the homeowners who are targeted for fraud.

The deal comes as the two states pulled out of nationwide settlement talks with the banks and have aggressively pursued independent investigations into the practice known as robo-signing, in which banks and mortgages servicers were accused of rubber-stamping foreclosures without actually reviewing homeowners' documents.

Harris has subpoenaed some of the nation's largest financial institutions, such as Fannie Mae, Freddie Mac, Bank of America Corp. and Lender Processing Services Inc.

Last December, Masto sued Bank of America for violating a three-year-old loan modification agreement with the state over predatory lending policies by its Countrywide unit.

Masto's suit, which was amended in August, alleged that the nation's largest lender filed foreclosures against homeowners with pending loan modification requests after promising not to do so and raised interest rates on troubled borrowers after promising to lower them.

In recent months, lenders have stepped up their foreclosure efforts in California and Nevada.

According to Irvine, Calif.-based RealtyTrac, notice of default filings in California - the first step in the foreclosure process - increased 17 percent in October to a 13-month high of 29,240.

That gave California the second-highest foreclosure rate in the country, with one in every 243 housing units facing a new foreclosure.

Nevada's foreclosure rate was tops, with one in every 180 homes receiving a foreclosure notice.

Read more: http://www.mcclatchydc.com/2011/12/06/132326/california-nevada-join-forces.html#ixzz1fs8K9c16