Traverse City Record-Eagle

Election 2010

October 7, 2010

Bernero seeks halt to hasty foreclosures

LANSING (AP) — Michigan should join the list of states where mortgage companies are freezing home foreclosures, two Detroit congressional members and a gubernatorial candidate said Wednesday.

Three major banks — Ally Financial Inc.'s GMAC Mortgage unit, Bank of America Corp. and JPMorgan Chase & Co. — have halted foreclosures in 23 states after evidence surfaced that their employees or outside lawyers signed documents without reading them or filed inaccurate paperwork.

Democratic U.S. Reps. John Conyers and Carolyn Cheeks Kilpatrick, of Detroit, said the banks should halt foreclosures in all states, not just the 23 where foreclosures go through judicial review.

Virg Bernero, the Democratic nominee for governor, said Attorney General Mike Cox should open a formal investigation to determine if any foreclosures have been affected by the banks' sloppiness, even though so few go through court in Michigan.

John Sellek, a spokesman for the state attorney general's office, said Bernero's call for a state investigation is just "politicizing the struggles of Michigan families."

Most Michigan mortgages include a "power of sale" clause that allows foreclosures through sheriff's sales, Sellek said. That means hardly any go through court, although that method occasionally is used.

"The issue of court documents, like the affidavits at issue in other states, (is) far less of an issue here," Sellek said. "We're still reaching out to other attorneys general, in case they uncover something that would be useful in Michigan." Conyers isn't buying the argument that the foreclosure problems just occurred in states where foreclosures go through court. He said in a statement that it makes "little sense" for the banks involved to limit the moratorium to 23 states "when many of the same errors and paperwork flaws likely plague" other states. The Senate Judiciary Committee chairman plans to investigate mortgage lenders to learn more about their foreclosure practices.

Bernero, who has said he would call for a two-year foreclosure moratorium if elected governor, urged the attorney general's office to take action immediately.

"Since Michigan homeowners don't even have the benefit of judicial review before losing their home, it is critical that immediate action be taken to protect our citizens from having their homes taken based on potentially fraudulent actions by Wall Street banks," Bernero said in a statement.

Republican gubernatorial candidate Rick Snyder said the banks that have acknowledged procedures weren't followed should be investigated. He doesn't favor a statewide moratorium because he said that could affect the availability of credit.

"We have to make sure we don't create a chilling effect on anyone trying to lend in our communities," he said.

Denise Keiser, executive director at the Center for Financial Health, said she often sees examples of mistakes by banks involved in foreclosure. Her nonprofit agency in Lansing counsels people in danger of losing their homes.

Keiser pointed to a recent case involving a family that was about to lose its home in a sheriff's sale. Bank of America incorrectly charged the homeowners the family's original mortgage payment after modifying the loan to lower the payments, she said. She added that the bank refused to acknowledge the error, refused to accept any more payments and moved ahead on foreclosure.

Keiser said she couldn't resolve the matter with the bank, so she turned to Fannie Mae, which temporarily halted the foreclosure until a solution could be reached.

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