On October 13, attorneys general in 50 states and the District of Columbia announced a joint investigation of the procedures followed by banks and mortgage companies in connection with completing affidavits relating to home foreclosures. In addition, a number of major companies that service mortgages suspended home foreclosures in those states that handle foreclosures through the court system to address allegations of irregularities in foreclosure documents.
Wells Fargo & Co. outlined its process for the generation of foreclosure affidavits in a press release filed with the Form 8-K on 10/28/10 (SEC file no. 1-2979). As part of its review of these procedures, the company identified instances where a final step in its processes relating to the execution of the foreclosure affidavits did not strictly adhere to the required procedures. "Out of an abundance of caution and to provide an additional level of assurance regarding its processes," Wells Fargo has elected to submit supplemental affidavits for approximately 55,000 foreclosures which are pending before courts in 23 judicial foreclosure states. The company does not believe that any of these instances led to foreclosures which should not have otherwise occurred, and it reaffirms that it does not plan to institute a moratorium on foreclosure sales.
Bank of America Corp. is also conducting a voluntary internal review of foreclosure process, with a particular focus on controls in place for competing affidavits and notarizations. The company is amending and re-filing 102,000 foreclosure affidavits in the 23 judicial states and has suspended foreclosure sales until its assessment in complete, anticipating that less than 30,000 foreclosure sales will be delayed as a result. This information was provided in select earnings related slides for use in connection with Q3 financial results, filed as an exhibit to the Bank of America Form 8-K on 10/19/10 (file no. 1-6523).
JPMorgan Chase & Co. notes a risk that it "may incur additional costs and expenses in remediating deficient home foreclosure procedures." That risk factor is included with a prospectus supplement for an underwritten notes offering (Form 424B2 dated 10/18/10, file no. 333-169900). The company disclosed it has suspended the foreclosure process with respect to approximately 115,000 delinquent mortgage loans, is developing new processes to satisfy all procedural requirements, and is cooperating with information requests from several state attorneys general.
DJSP Enterprises, Inc., the largest provider of processing services for the mortgage and real estate industries in Florida, announced on October 15 that the audit committee of its board of directors has commenced an internal investigation with respect to compliance with applicable legal requirements of the company’s mortgage foreclosure processing procedures. The audit committee has retained Greenberg Traurig, P.A. as independent counsel to assist in the conduct of the investigation. DJSP also announced that it has instituted 10% staff reductions as a result of reduced file volumes. DJSP notes that file referrals from the company’s principal client, The Law Offices of David J. Stern, P.A. have declined dramatically, and that the law firm is the subject of an investigation announced by the Attorney General of the State of Florida in August 2010. DJSP made these disclosures in Form 6-K (file no. 1-34149) Form 424B3 prospectus supplement (333-164907) each filed 10/18/10.
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