All 50 states have launched a joint probe into allegations that mortgage companies illegally foreclosed on hundreds of thousands of properties.
"It appears affidavits and other documents have been signed by persons who did not have personal knowledge of the facts asserted in the documents," the National Association of Attorneys General said in an Oct. 13 statement. "In addition, it appears that many affidavits were signed outside of the presence of a notary public, contrary to state law."
Signing documents without confirming their accuracy-a practice known as robo-signing-"may constitute a deceptive act and/or an unfair practice," the statement said.
Several attorneys general-along with various lawmakers and consumer groups-urged banks to halt foreclosures until any problems are resolved. Bank of America complied, announcing a foreclosure halt in all 50 states. GMAC stopped short of suspending all foreclosures, but said it would hire legal and accounting firms to conduct "independent reviews" of its foreclosure process.
Concerned about the economic impact of a foreclosure freeze, the Obama administration opposed the idea. "Delays in foreclosures add cost and other burdens for communities, investors, and taxpayers," the Federal Housing Finance Agency warned in a policy statement issued Oct. 13.
Earlier, The New York Times reported that Old Republic National Title Insurance, one of the nation's largest title insurance companies, informed agents that the company would stop insuring titles on properties foreclosed by GMAC and JPMorgan Chase until "objectionable issues have been resolved"-a sign that flawed foreclosure paperwork could undermine the resale of some foreclosed homes. Title insurance protects a buyer in the event of a dispute about who actually owns a property.
As part of its new "consumer empowerment agenda," the Federal Communications Commission proposed rules that would require mobile phone companies to warn customers who are about to reach their usage limit and incur additional charges. "Something is clearly wrong with a system that makes it possible for consumers to run up big bills without knowing it," FCC chairman Julius Genachowski said.
But the proposed rules, which wouldn't go into effect until next year, may be playing catch-up to the evolving marketplace. AT&T already sends a message to iPad users who are reaching their monthly data-usage limit. Even so, AT&T opposed the proposed rules in an FCC filing, according to The New York Times. The phone company argues that a government mandate would likely "serve as an obstacle"-not a help-to improving "customer experience."
Meanwhile, Minnesota-based TCF Financial Corp.-one of the nation's top debit-card issuers-filed a lawsuit seeking to halt release of debit-transaction rules to be issued under the Dodd-Frank financial-overhaul law. The company argues that the new law is unconstitutional because it unfairly targets large financial institutions. The debit-card regulation, being formulated by the Federal Reserve, would govern how much banks with assets of more than $10 billion can charge merchants for debit transactions. Other banks are expected to join the TCF suit.
Joseph Slife is the assistant editor of SoundMindInvesting.com