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HousingWire: Rep. Waters calls mortgage servicing an industry in crisis

January 17, 2011
In The News

By Jon Prior

Rep. Maxine Waters (D-Calif.) said the latest misstep by JPMorgan Chase which led to improper foreclosures for military families, has pushed the industry into "crisis."

NBC News reported Monday that the bank overcharged some 4,000 troops on their mortgage and filed improper foreclosures on more than one dozen families. In October, major lenders including Bank of America, Ally Financial and JPMorgan Chase  froze foreclosures when employees were found to be signing affidavits without reviewing the documentation. Others, including Citigroup and Wells Fargo had to refile thousands of cases.

A recent ruling in Massachusetts voided two foreclosures from U.S. Bank and Wells Fargo when the two lenders could not adequately prove they held the note.

"After a temporary moratorium, JPMorgan Chase decided to restart foreclosures only a month after uncovering robo-signing and other systematic failures in their servicing processes," Waters said in a statement sent to HousingWire Monday. "While their Nov. 18 testimony at a hearing of my Subcommittee on Housing and Community Opportunity claimed that the bank had fixed all problems in their servicing operations, the stories of these families clearly suggest otherwise. It is particularly disgraceful that these errors affected military families, some of whom are already dealing with the stress of deployments."

The Mortgage Bankers Association will hold a in Washington, D.C., that will include regulators and bankers attempting to strike a new national standard for servicing. While many consumer advocate groups and lawyers say the banks are intentionally cutting corners, government officials say the companies were simply unprepared for the record volume of troubled loans in recent years.

Waters told HousingWire she will continue to seek solutions through legislation in the new Congress.

"Unfortunately, anecdotes about improper fees and wrongful foreclosures keep piling up, to the point where I believe there is a crisis across the entire servicing industry," Waters said. "I will continue to advocate for servicing reform in the 112th Congress, because without systemic change, stories like this will continue."