Kansas City mayor Mark Funkhouser publicly called on Attorney General Chris Koster to impose a moratorium on home foreclosures at a meeting in Kansas City.
“We think it is premature at this point to make that kind of sweeping call for a moratorium. There are several things AG’s around the country are doing. There’s a working task force that the AG’s have formed. We will continue to work in consultation with the Federal Treasury as well as the Federal Trade Commission. But we think that the possibility of unintended consequences by that type of a sweeping call could yield effects that actually harm markets,” Koster said.
Funkhouser says banks should be prohibited from foreclosing on homes until they answer allegations that questionable documentation has been used in foreclosures nationwide.
“We have evidence that there are real problems in the foreclosure process and it’s harming folks. We need to stop, take a look, and see how it can be fixed,” Funkhouser said.
Koster says the mayor did call him before the statement was made Monday.
Six other state attorneys general have imposed moratoriums, but Koster questions their authority to do so.
“I don’t think there is any inherent power in state law that could give this Attorney General’s office or any other Attorney General’s office the power to throw the brakes on these. The most aggressive thing we could do would probably be to enter into some kind of lawsuit, litigation that would take months and months to resolve itself in terms of unfair business practices,” Koster said.
Koster says many banks are practicing “corporate stewardship” by investigating these matters internally, and in some cases putting a halt on foreclosures in the short term.
He says an announcement on Wednesday will reveal more about the task force of many Attorneys General across the country, which will also be investigating these issues. He says if fraud is identified it will be acted on, but it’s not an assumption at this point.
“Just in thinking through it logically, I think what we are probably looking at is sloppiness more than fraud. That these mortgages were originated quickly at the height of the bubble, they were sent to New York. They were packaged up and the documents did not follow the securitization papers. So I think what Bank of America is dealing with is more likely a case of sloppiness rather than fraud. But only a full investigation is going to determine that completely,” Koster said.
Koster says his office does have a hotline to take complaints on this issue, and says they’ve received about 12-15 of them. He says that’s not a small number, but “not a tidal wave either.” He does encourage Missourians to call 1-800-392-8222 if they have a complaint.