Reuters Investigates

Insight and investigations from our expert reporters

Fake documents suggest bigger problem

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Action in March by federal  bank regulators wasn’t enough to scare banks away from the way they handled foreclosures. Reuters found that big banks that service mortgage loans continue to use robo-signers, file false documents and mislead courts in their efforts to take houses from homeowners delinquent on their mortgages.

The findings point to the need for a widespread audit of mortgage documentation by federal bank regulators, a step they have so far strongly resisted. The pervasive use of questionable documents in foreclosures suggests that the cause is deeper than just corner-cutting by mortgage loan servicers. It suggests that to a large extent, original lenders never turned over the required ownership documents when pools of new mortgages were securitized and sold to investors. Investors may have spent billions to buy mortgages they never received.

By Scot Paltrow

Link to PDF: http://link.reuters.com/kyb72s

Catch-22 in the housing market

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Washington is abuzz with the arguments about foreclosures and whether banks have been steamrollering them through, but many Americans at the other end of the spectrum are having their own problems with mortgage lenders.

One of the couples featured in our special report on how hard it is to get a mortgage were originally turned down because the top right-hand corner of a paystub appeared torn in a photocopy. This despite the fact that the applicants’ debt was just 14 percent of their income and they were borrowing just 25 percent of the home’s value.