Illinois seeks 23 loan servicers' foreclosure data

Illinois Attorney General Lisa Madigan asked 23 mortgage loan servicers to halt pending foreclosures unless they can prove the underlying documentation on the loans is reliable.

Madigan, who last week asked JPMorgan Chase & Co., Bank of America Corp. and Ally Financial Inc. to stop foreclosures in her state because of reported paperwork deficiencies, expanded her request today to the loan servicers.

“The same mortgage giants and big banks that fraudulently put people in unfair loans are now fraudulently throwing people out of their homes,” Madigan said today in a statement. “They should not be above the law.”

In 2008, Madigan settled consumer fraud litigation with Countrywide Financial Corp., now part of Charlotte, North Carolina-based Bank of America Corp., for more than $8 billion.

Attorneys general from at least seven states are investigating whether lenders have used false documentation and signatures in the course of thousands of home foreclosures.

JPMorgan Chase, the third largest U.S. loan servicer, said last week it was stopping those proceedings in 23 states while it examined supporting papers associated with 56,000 loans.

Fraud and Violations

Ohio Attorney General Richard Cordray yesterday sued Ally, accusing the lender of fraud and violations of state consumer protection laws.

The Detroit-based lender, which conducts its mortgage loan business as GMAC Mortgage LLC, issued a statement denying Cordray's allegations.

Iowa Attorney General Tom Miller today joined Cordray, Madigan and other top state law enforcement officials in asking JPMorgan Chase, Bank of America and Ally, as well as all other lenders with knowledge of defective applications, to stop foreclosures, evictions and sheriff's sales in his state.

Bank of America, the largest U.S. bank by assets, last week said it would freeze foreclosures after acting Comptroller of Currency John Walsh asked the seven biggest lenders in the nation to review their proceedings.

Madigan has demanded a meeting with JPMorgan, Bank of America and Ally officials.

“We have begun discussions with them,” Robyn Ziegler, a spokeswoman for Madigan, said in a telephone interview today.