This article first appeared in the St. Louis Beacon, Nov. 18, 2010 - Missouri Attorney General Chris Koster says the probe by 50 state attorneys general into the foreclosure practices of mortgage lenders will be done with due diligence, despite growing calls from the industry for a quick resolution.
"The attorneys general didn't create this crisis. Our only duty is to do a good job on the investigation," Koster told the Beacon Thursday. "The fact that others who may have had a hand in creating the robo-signing protocols and other paperwork errors -- the fact that these individuals may feel pressure -- does not mean that the attorneys general feel pressure. We'll proceed with appropriate diligence."
Two industry leaders -- Doug Braunstein, the chief financial officer of JPMorgan Chase and Brian Moynihan, chief executive of Bank of America -- said at a financial services meeting in New York this week that it is in everyone's best interest to get the investigation settled. Moynihan described the foreclosure process as "difficult" for homeowners and suggested that the industry and lawmakers look at streamlining the process.
But Koster, who was speaking at a conference on foreclosures in St. Charles County, said the investigation is going to take time, despite the group's efforts to fast-track the inquiry.
Koster said he has heard from several hundred Missourians since the beginning of October when reports of lenders "robo-signing" thousands of foreclosure documents without verifying their authenticity hit the news along with concerns over other servicing irregularities.
"My office hears every day from consumers in this state who are trying to do the right thing," he said.
Koster said homeowners complain of being caught in an endless loop of lost paperwork when attempting to deal with mortgage servicers and are given misinformation -- such as being told that they must be three months behind on their mortgage before seeking help.
"They're being told to default on their mortgage to save their homes," he said.
The attorney general's office is keenly interested in stopping preventable foreclosures, Koster said. But while he believes that homeowners should be given every opportunity to get reasonable mortgage modifications, he is opposed to a nationwide moratorium on foreclosures.
"Despite the problems that have occurred across the country, I do not believe this country should have a moratorium on foreclosures," he said. "Nearly every attorney general agrees with this. Essentially shutting down the system would be devastating to the economy -- specifically the availability of mortgage capital and lending rates would be dramatically affected. But clearly something must be done."
Koster noted that because Missouri is a non-judicial foreclosure state, meaning that foreclosures proceed without court supervision. It is vital that Missouri homeowners have access to accurate information early in the process so that payment errors and improper fees can be rectified.
It's not surprising that homeowners don't trust the system, he said.
"The financial institutions have unfortunately legitimized our worst fears and concerns," Koster said. "When major institutions impose a foreclosure moratorium on themselves because they are concerned whether or not they have complied with state and federal laws, it is absolutely understandable that a consumer would step back and ask, 'What the heck is going on here?' "
Koster directed at-risk homeowners to the attorney general's website for tools to help them determine whether a foreclosure is being handled properly and directions for getting documents from their servicers. The site has a "qualified written request" form that can be downloaded.
"It's not going to be a surprise to a consumer that they have fallen behind on their mortgage, but when a foreclosing agent comes to their home and takes their most vital asset they are right to ask the questions. Essentially, show me who you are; prove to me that you are the right person for me to be dealing with," he said.
Koster said his office continues to hear from homeowners who have been denied permanent mortgage modifications by lenders, despite faithfully making temporary modification payments. Consumers who feel that lenders unfairly "pulled the rug from under them" should contact his office.
He pointed to a disappointing number of mortgage modifications made through the federal government's Making Home Affordable program, announced by President Barack Obama in spring 2009.
"There are only 500,000 modifications in a plan that should have yielded 3 million to 3.5 million modifications by this point in time," he said. "The lack of cooperation with the Treasury Department and with the programs that the administration has put in place -- in a bipartisan fashion -- is striking."
