Another lawsuit is in the works for the mortgage industry. I had recently blogged about the Obama administration’s plans to create a Justice Department unit whose main goal and intent was to prevent mortgage fraud by bringing together investigators from across the country aimed at finding out what the causes of residential mortgage backed securities. They want to know what led to it and how to continue to prevent it.
Well, New York Attorney General Eric Schneiderman has taken it one step further by suing Bank of America, J.P. Morgan Chase, and Wells Fargo. His lawsuit accuses the three big banks of deceit and fraud over their use of MERS, the Mortgage Electronic Registration Systems.
He has a few claims here. (1) That the banks submitted court documents that appeared to provide authorization for foreclosures with false and misleading information. (2) The system stores inaccurate data. (3) It prevents homeowners from being able to track property transfer information from public records.
Schneiderman said, “Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law.”
He’s claiming that over 70 million loans were affected and that the banks saved over $2 billion. Of course, none of the banks had any comments in response to the lawsuit when it was filed Friday. More information can be found in this USA Today article.
So the question is, will this affect the mortgage industry and homeowners in the long run? If anything, I can see a possible settlement by the banks rather than fighting it in court. It seems to be something that will continuously happen throughout the next few years, banks being sued because of inaccuracies that led to false foreclosures. Do you see this as something that can drastically change how banks loan money to future homeowners? To me, it seems like another check mark on a checklist but nothing that would change lending terms as a whole. Please leave me your comments. I’d love to hear from you!