Fla. joins multi-state housing crisis probe

TALLAHASSEE, Fla. – Oct. 12, 2010 – Florida is joining a multi-state probe into the national foreclosure crisis that has placed a chokehold on the state’s housing market, a spokeswoman for Attorney General Bill McCollum confirmed Monday.

A working group, led by Iowa Attorney General Tom Miller, is investigating practices by some of the nation’s largest banks and mortgage lenders. In the past few weeks, Bank of America, GMAC and JP Morgan Chase have all announced that they are freezing foreclosure proceedings in Florida in light of allegations that the companies did not follow protocol when dispensing with the cases.

“The mortgage industry is getting the message that this is serious, it’s wrong, and we will stop it,” Miller said in a statement.

McCollum spokeswoman Ryan Wiggins says that McCollum has joined the working group but declined to say exactly what the group has done so far. Bloomberg News reports that the group is likely to make an announcement regarding its future plans this week.

Florida has been hit particularly hard in the economic downturn, which dealt a serious blow to the housing market. Though the state has shown some improvement, it is still the second worst state behind Nevada in the percentage of housing units receiving foreclosure notices during August, with one in every 155 homes falling behind, according to RealtyTrac.

The state has enacted a number of programs to deal with the foreclosure mess. Volunteer attorneys have been working with clients to help navigate the court system. The courts were given extra money to bring in retired judges specifically to work on the foreclosure docket. And McCollum has launched investigations into four Florida law firms over alleged unsavory practices related to foreclosures.

A Palm Beach County circuit judge ruled law week that the attorney general could not investigate one of the firms, Shapiro & Fishman, for alleged involvement in presenting fabricated documents to the courts in foreclosure cases. McCollum’s office announced Monday that it would appeal the ruling.

“When an attorney is suspected of creating and then using forged documents, even in court, the judicial and executive branches have concurrent jurisdiction,” the motion for rehearing said.

The issue is ripe for legislation as well. Rep. Maria Sachs, D-Delray Beach, has asked lawmakers, bankers, lawyers and homeowner groups to begin collaborating on policy that could help resolve some of the issues facing the state. She also generally called for increased regulation of large banks and law firms to protect homeowners facing foreclosure.

“It is time to reform the law to match the realities of our present economy in order to guard our citizens from the careless greed of those working to take advantage of their misfortune,” Sachs said in a statement.