Cleaning house

11 October 2010 By Antony Currie Follow @AntonyMCurrie

The private sector needs a renaissance in securitization to get back into U.S. mortgage lending in size. Yet the latest documentation woes add to the list of failures stemming from shortcuts the business took last time round. All must be fixed if the market is to blossom again.

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At least twothirds of U.S. states' attorneys general are planning to launch a joint probe into charges some banks used fraudulent paperwork to foreclose on homes, according to Reuters.

Bank of America on Oct. 8 announced it was halting foreclosure sales in all 50 states while it reviews its procedures. The bank stated that its ongoing assessment shows the basis for our past foreclosure decisions is accurate.

Last month GMAC Mortgage announced it was suspending evictions and foreclosure sales in 23 states which require judicial review before foreclosures are granted. It took this step after it was discovered that a single GMAC employee had signed off on thousands of foreclosure requests without having knowledge of the cases, contrary to what is required by those states.

Soon after, JPMorgan and Bank of America admitted they, too, had used socalled robosigners and took similar action to halt parts of the foreclosure process.

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