Texas Attorney General Greg Abbott asked loan servicing companies on Monday to suspend all foreclosure activities over concerns about the accuracy of foreclosure documents.
In a letter sent to 27 companies that service mortgage loans in Texas, Abbott's office demanded the immediate suspension of foreclosures, selling foreclosed properties and evicting people living in those properties.
The letter asks that companies obey the moratorium at least through Oct. 15 - the deadline Abbott established for companies to identify any employees who participated in unlawful practices and assure the state that the targeted companies are following Texas laws.
The attorney general's office is investigating mortgage lenders to determine the "full harm Texas homeowners have suffered," according to a letter signed by Paul D. Carmona, the chief of the state consumer protection and public health division.
"We will be pushing forward with our investigation and inquiry," attorney general spokesman Jerry Strickland said. "This is in the interest of homeowners who are feeling the effects of foreclosures."
Other states are taking similar action. Maryland Gov. Martin O'Malley supports a 60-day moratorium on foreclosures there. Delaware Attorney General Beau Biden is calling on mortgage banks to suspend all pending foreclosures until their policies are reviewed. And in Massachusetts, Attorney General Martha Coakley said her office is investigating an "apparent failure of major creditors to follow state foreclosure law."
The Texas request comes after several companies, including Bank of America Corp., suspended foreclosures following revelations of "robosigning," a practice in which bank employees sign thousands of foreclosure documents a month without verifying their accuracy or even reading them. Some of the court documents have proven to contain inaccurate information or improper notarizations or signatures.
In his letter, Carmona described possible fraudulent practices by lenders, including signing thousands of documents per months, often without reading them; signing affidavits falsely claiming personal knowledge of facts or falsely claiming the signing party reviewed attached documents; and notarizing documents prior to their signing or when the signer was not present.