'Robo-Signer' Foreclosure Scandal May Threaten Fundamental Financial Stability, Government Watchdog WarnsSubmitted by bobbyw24 on Tue, 11/16/2010 - 12:44
The ongoing "turmoil" roiling megabanks and their faulty home foreclosure practices may represent deeper, more systemic problems regarding the origination, transfer and ownership of millions of mortgages, potentially putting Wall Street on the hook for billions of dollars in unexpected losses, threatening to undermine "the very financial stability that the Troubled Asset Relief Program was designed to protect," a government watchdog warns in a new report.
Recent revelations regarding mortgage companies' use of "robo-signers" when processing foreclosure documents "may have concealed much deeper problems in the mortgage market," according to the Tuesday report by the Congressional Oversight Panel, an office formed to keep tabs on the bailout.
Those initial disclosures led big banks like JPMorgan Chase, Wells Fargo and Bank of America to temporarily halt home repossessions. In turn, all 50 state attorneys general, federal prosecutors and a host of federal agencies are probing exactly what went wrong as the industry fights to calm regulators, investors, and members of Congress by arguing the revelations represent isolated cases that are being quickly resolved.