Missouri is part of the effort among Attorney Generals from all 50 states investigating possible problems with foreclosure documentation.
Nearly 100 Missourians have called Attorney General Chris Koster’s office in the last month with complaints about their foreclosure proceedings. There’s been a lot of media attention to questions about the legality of the foreclosure paperwork at many major mortgage companies; enough that Bank of America temporarily suspended new foreclosures.
“(In) Missouri cases are against these major institutions, we’re talking about an investigation that could comprise tens of millions of documents. So it’s too early to talk about progress because we just don’t have that information yet,” Koster said.
Koster says the Missouri cases will likely go hand-in-hand with ones across the nation if it legal issues are found.
“It is very possible that if the allegations are proven, are thought to be true, that this ends in litigation and this is a two to three year process,” Koster said.
Koster encourages Missourians dealing with a possible foreclosure to visit his website, where his office has posted new resources to help navigate the process. He says one important asset on the site is a form letter people can use to request the information they need to negotiate their mortgage.
“If you just ask your service provider or your bank to send you all the relevant documentation, you may well not get it. You have to send them a specific, qualified written request under federal law. So these are 13 important documents, 13 important questions that anyone who is going through a foreclosure process will want to know,” Koster said.
He says if there does appear to be a problem; it’s very likely you’ll need to get an attorney to make the rest of the way through the process. Dave Angle with the Missouri Attorney General’s office says it’s hard to know how long it will take for someone who may have gone through a fraudulent process to get a fair shake.
“That’s a difficult question and that’s, I think, what the attorney general group is struggling with now. How do you unwind such a situation? I don’t think there is a stock answer that we can provide. It is a very difficult and complex process to try and unwind something that has already happened; particularly in a non-judicial foreclosure state where a sale may have already occurred. That’s one of the reasons why competent legal representation is so important,” Angle said.
But Koster says this effort could also help more people find their way out of the foreclosure process.
“The administration had hoped there’d be something on the order of about 3 million (foreclosure) workouts. At this point in the process there have only been about 400 thousand, 500 thousand workouts, if that. One of the hopes is that this 50 state AG investigation may provide a new avenue of pressure on this workout system,” Koster said.
Many Missourians are still dealing with the threat of foreclosure, and many of them don’t know where to turn for help. Koster says some scammers are still trying to prey on that confusion.
“The issue of foreclosure modification still remains a scam that we are very vigilant of here in the state. We probably have 5,6,7,8 lawsuits that are now pending against mortgage modifiers, people who claim that if you send us $2,000-$3,000 we’ll get your mortgage worked out. Nobody should ever send upfront payment to someone claiming to be in the business of mortgage modification. Upfront payments, as you know, are unlawful in the state of Missouri and we immediately prosecute those entities that try that. But most of the mortgage workouts that are attempted by private companies have not been very successful. You’re much better off going through a governmental certified housing counselor such as they have at HUD,” Koster said.