After a probe earlier this year that found "critical deficiencies" with the industry's foreclosure processes, five mortgage servicers are about to be punished.
Last February the acting head of the Office of the Comptroller of the Currency John Walsh said that a national probe of foreclosure paperwork and procedures found that mortgage servicers broke laws, and as a result some homeowners were wrongly evicted from their homes.
Walsh also said during his congressional testimony, "These deficiencies have resulted in violations of state and local foreclosure laws, regulations, or rules and have had an adverse affect on the functioning of the mortgage markets and the U.S. economy as a whole."
Now, five of the nation's largest mortgage servicers, Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc., could face $17 billion in civil lawsuits.
These U.S. mortgage servicers have been accused of possibly taking illegal shortcuts in some of their foreclosure proceedings which has included the use of "robo-signers" to sign hundreds of unread documents each day and advancing foreclosures without proof that they even held the mortgages.
An alliance of State Attorney Generals in addition to other federal agencies including the departments of Treasury, Justice, H.U.D. and the Federal Trade Commission have been investigating the foreclosure practices of these five mortgage servicers since the robo-signing scandal was brought to light late last year and now all five of these mortage servicers have been warned of their potential liability by State Attorney Generals during negotiations in Washington this week.