Iowa AG Miller says foreclosure investigation is broad-based

Q: Can you describe the scope of your investigation?

A: Initially what surfaced somewhat dramatically in mid- to late-September was the question of affidavits and notaries, whether either or both were robo-signed, rather than servicers fulfilling the obligations that they should have.



On affidavits, they're supposed to say we've looked through the records, and people owe this much, and they're in default, etc., and can verify that. Instead of doing that, they signed one affidavit after another.

And the notaries were supposed to have the person doing the affidavit in front of them and ascertain they were the person. They were doing the same thing, signing one affidavit after another without the people in front of them.



Once we got involved, it became clear that there were additional and similar problems, with servicing of loans generally, and the modification of those loans, in particular. So we combined both significant concerns in our investigation.

We're also looking at issues like the assignment process of mortgages from one entity to another. We're also looking at the fees charged to homeowners in modifications and foreclosures to see if they were proper.



What we decided to do was to have a fairly broad-based investigation and try to work through that and have a remedy that left the system and the country better off than when the mess started in September.



Q: Who all is involved in the investigation?

A: We have an executive committee of 14 state attorneys general and three or four banking regulators that have been working hard. We have met with the five largest servicers that service 59 percent of the mortgages in America. It's a big part of the mortgage operation. It's Bank of America, Wells Fargo, JPMorgan Chase, Citibank and Ally Financial/GMAC.



Q: To step back a second, how did you go from looking at robo-signing of affidavits and notaries to looking at loan modifications? How are they similar?

A: They're similar in the sense that one of the causes of the robo-signing was really under-funding the process. One of the problems with mortgage servicing is that they haven't funded the process. They haven't hired enough people and trained them well enough to do it. So there were similarities there.



Also, the thinking from the beginning was if companies owed substantial fines from robo-signing, it would make more sense to use that money to further the modification and servicing process and make that what it should be. That's the connection.

Q: There have been reports about your group requiring some kind of compensation fund. Is that an option?

A: That's an option - to compensate homeowners who were foreclosed upon that shouldn't have been. And I think that's something that should be in a resolution.

But I don't think that will be a major part of the resolution. I think, at one point, there was a lot of press on that, and as a result, it was made out to be larger in this process than it will be.



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