Foreclosure Investigation Initiated by Attorney General of Iowa

Against the background of fierce outrage by the public, the Attorney General of Iowa, Tom Miller has initiated foreclosure investigation to find out fraud in documents.

Personally he felt furious upon coming to know of these robo-signers about a month ago that has caused the mega mortgage lenders and servicers to suspend their foreclosure operations. Miller (66 years) said, "My first reaction was concern, and curiousness as to the extent of it. My second reaction was, How the hell can they let this happen"?

A graduate from Harvard Law School, Miller has been occupying the post of Attorney General for the seventh term. He was of course not totally surprised by the turn of events. For many years together with Assistant Attorney General Patrick Madigan he has been coming across the abuses and slipshod works of the mortgage sector.

They have given the lead to the inter-state efforts that in 2005 made sub-prime lender Ameriquest reach a settlement of $325 million. They cooperated in another inter-state effort to stop foreclosures just at a point when the housing sector began to crumble.

But both Miller and Madigan contend that have never come across this kind of furious public outcry against the wrongdoings of the financial industry. The mega banks and their servicers have submitted millions of questionable documents in court right across the nation.

Madigan said, "This has become a proxy for the frustration with the banks and with the foreclosure process. This was the straw that broke the camel’s back. We didn’t pick this issue. It picked us."

Sitting in his office at Des Moines commanding a majestic view of autumn colours, Miller said that it is not clear to him and his peers just how intense the problem is. He has only just started to collect information and find out the investigation’s scope. Nobody as yet knows how widespread it is, he said.

The team of attorneys general is communicating with various banks as well as servicers. Plans are afoot to contact even more institutions related with the recent twist in the crisis. They are also starting to coordinate their activities with other federal agencies like HUD. 

Shaun Donovan, the secretary of HUD said that they have started to undertake a comprehensive scrutiny of these cases. Speaking to reporters Donovan said that till now no systematic defects in the servicing industry have been found.