Helping Homeowners - Attorney General's Office Initiatives

The Attorney General's Office has been working to promote fair mortgage practices for more than a decade.

Active Litigation

Enforcement Actions

Legislation

Additional Efforts: Federal Work, Partnerships and Prevention

Washington state government officials are now investigating foreclosure servicing problems:

1) Multistate Investigation
The Attorney General’s Office and the Department of Financial Institutions joined the National Association of Attorneys General and banking regulators in forming a multistate group to investigate whether mortgage servicers have improperly submitted affidavits or other documents related to foreclosures in their states. The focus of the investigation is on servicing issues -- not specifically robosigning.

 The Washington Attorney General’s Office serves on the executive committee of the multistate group. The group issued a joint statement on Oct. 13, 2010, through the National Association of Attorney General in which they voiced their shared concerns.

The attorneys general are working cooperatively with relevant federal agencies, including the Office of the Comptroller of the Currency, on the foreclosure investigation. Regardless of any federal action, the attorneys general intend to pursue state claims and remedies.

The multistate group, through its executive committee, is contacting a comprehensive list of individual mortgage servicers. The group’s initial goals include:

• Put an immediate stop to improper mortgage foreclosure practices.
• Review past and present practices by mortgage servicers subject to the inquiry.
• Evaluate potential remedies for past practices and to deter future improper practices.
• Establish a mechanism for more effective independent monitoring of future mortgage foreclosure practices.

Additionally, the Mortgage Fraud Working Group of The Financial Fraud Enforcement Task Force, a joint federal-state initiative co-chaired by Attorney General McKenna, is also investigating certain aspects of these foreclosure problems.

News Release - Oct. 13, 2010 - Attorney General McKenna, DFI join multistate investigation into mortgage servicers 

2) Washington State Investigation Into Trustees

On the local front, the Washington Attorney General’s Consumer Protection Division since May 2010 has been investigating reports of lenders and trustee services not properly reviewing foreclosure documents or following other legal procedures.

As part of that investigation, Attorney General McKenna sent letters on Oct. 13, 2010, to 52 trustees outlining his concerns and calling on them to suspend any questionable foreclosures in the state. Since then, the office has requested and received documents from several trustees. Attorneys are reviewing the information they have received so far and are waiting for documents from other companies. A second letter was sent on April 6, 2011, after additional problems were discovered.

On Aug. 5, 2011, Attorney General Rob McKenna today announced a lawsuit against ReconTrust Company, a subsidiary of Bank of America, for conducting illegal foreclosures on thousands of Washington homeowners. ReconTrust is a foreclosure trustee that is legally required to act as a neutral party on behalf of both the lender and the borrower while conducting foreclosure proceedings in good faith and in accordance with the law.

The AGO does not have the authority to order companies to stop foreclosing. Washington is a so-called “non-judicial foreclosure” state, which means that a lender can proceed directly to selling a home at public auction without first filing a lawsuit. This process was created by the state Legislature and our office has no authority to change it, or to order companies to stop foreclosing.  Although lenders could foreclose in court in Washington, they almost always choose non-judicial foreclosures.

In states like Washington, foreclosure proceedings are generally undertaken by a third party trustee and not directly by the lender. This is why we requested trustees suspend questionable foreclosures until they can verify they are legal. The focus of our communication to trustees and servicers is directed at pending and future foreclosures. If the documentation, notices and processes involved in those comply with Washington law, they can move forward. If irregularities exist, they should be corrected before the foreclosure process is reinstituted.

Additionally, we agree with the Obama administration that we must be careful not to over-reach and apply a remedy that will make the underlying problem of foreclosures worse.

The AGO also does not have the legal authority to initiate a criminal investigation or prosecution without request from a county prosecutor or the Governor.

If you believe unlawful activity has occurred in regard to your mortgage or have information about a problem that may be helpful to our investigation, please see our Help and Resources page.

News Release - April 6, 2011: Washington Attorney General’s investigation turns up additional foreclosure process problems 

News Release - Oct. 12, 2010: Attorney General McKenna calls for mortgage trustees to suspend questionable foreclosures 

As a result of settlements reached by the Attorney General's Office, help is available for Washington residents who obtained problematic mortgages from certain lenders. Check your eligibility.

• 2002 - The office took a leading role in reaching a $484 million settlement with Household International.
• 2006 - The office took a leading role in reaching a $325 million nationwide settlement with Ameriquest.
• 2008 - Washington and 39 other states announced a landmark agreement in which Bank of America agreed to modify loan terms for Countrywide borrowers. The settlement also provided money for borrowers who lost their homes and to fund local foreclosure prevention programs.
• 2010 -The Attorney General's Office reached a settlement with Wells Fargo that provides loan modifications for consumers in seven states who obtained problematic mortgages from Wachovia Bank and Golden West/World Savings Bank.
• Aug. 5, 2011 - Attorney General Rob McKenna announced a lawsuit against ReconTrust Company, a subsidiary of Bank of America, for conducting illegal foreclosures on thousands of Washington homeowners.
• The Attorney General’s Consumer Protection Division has brought civil suits against several businesses and individuals that promised to help save homes from foreclosure (for a fee) but then failed to do so.

During the 2007-2008 legislative session, the Attorney General’s Office requested a law (RCW 61.34.020) to reduce foreclosure rescue schemes that include an option to buy or lease back the property. This law requires a written contract with clearly disclosed terms to be completed by the homeowner and the purchaser prior to the property’s transfer. It also requires that the homeowner must receive at least 82 percent of the difference between the property’s fair market value and the underlying mortgage in the event of a sale to a third party. Additional legislation, approved by the Legislature in 2009 and jointly requested by our office and the state departments of Licensing and Financial Institutions, exempts real estate brokers from the law and allows those simply offering to buy the home within 20 days of foreclosure to make the purchase. The change ensures that any homeowner who wants to sell their home rather than face foreclosure is able to find a real estate agent.

During the 2009-2010 legislative session, the Attorney General's Office requested a law to protect families who have lost homes to tax foreclosure. Families who have lost homes have been approached by individuals and firms offering to obtain money remaining after the auction on their behalf -- in return for a cut as high as 70 percent.  It's easy -- and free -- for former property owners to receive surplus funds. The law places a 5 percent cap on such finder's fees, the same amount allowed for other kinds of unclaimed funds.

Federal Work

• McKenna is co-chair of the Financial Fraud Enforcement Task Force. Additional members include representatives of the U.S. Department of Justice, Department of Treasury, Department of Housing and Urban Development and the Federal Trade Commission and the attorneys general of Arizona, Colorado, Illinois, Nevada, North Carolina, Massachusetts, Missouri and Ohio. They are working to crack down on unethical lenders, equity skimmers, foreclosure rescuer schemers and straw purchasers.
• McKenna joined 22 other attorney generals in an effort to convince Congress to loosen bankruptcy rules so judges can modify home loans to help reduce foreclosures. They sent a letter in January 2009 asking Congress to allow the bankruptcy courts to order loan modifications.
• The Washington State Attorney General’s office plays a leading role in the State Foreclosure Prevention Working Group, a coalition of state attorneys general and state banking regulators, formed to identify strategies to prevent unnecessary foreclosures. The working group has approached every major loan servicer on behalf of struggling borrowers. The group also sent a letter in February 2009 urging federal officials to encourage national banks and federal thrift-servicing operations to modify mortgage loans that are becoming unaffordable for consumers. The group was founded in 2007 and issues regular reports on the status of foreclosure prevention efforts, available at www.csbs.org/regulatory/Pages/SFPWG.aspx.
• A smaller number of attorneys general, including Rob McKenna, are part of a group called the Attorneys General and State Banking Regulators’ Federal Preemption Working Group. They are working with the U.S. Comptroller of the Currency to get more authority for the states.

Partnerships and Prevention

• In June 2007, the Attorney General’s Office convened a Foreclosure Think Tank with the Washington Bar Association and the Northwest Justice Project to look at issues surrounding foreclosure. The think tank brought together representatives from government agencies and nonprofit organizations, private attorneys and industry professionals.
• We’ve met with foreclosure and homeownership counselors certified by U.S. Department of Housing and Urban Development (HUD) across the state to learn firsthand what kind of experiences they are seeing and to ask for their ideas on ways to help borrowers in trouble.
• The Attorney General's Office provided $5,000 to fund an event at Gonzaga University to train lawyers how to provide pro bono services to clients facing foreclosure. Money for the training came from cy pres restitution paid by defendants in consumer protection enforcement actions. Assistant Attorney General David Huey presented at the event and similar trainings at Seattle University and the Washington State Association for Justice, formerly known as the state Trial Lawyers Association.
• The Attorney General's Office granted $1.1 million from its settlement with Wells Fargo and $320,000 from its Countrywide/Bank of America settlement to the Washington State Bar Association to fund the Home Foreclosure Legal Aid Project, which provides free legal services to homeowners facing foreclosure.
• The Attorney General's Office also granted nearly $600,000 of its Countrywide/Bank of America settlement payment to the Washington State Housing Finance Commission to distribute among qualified housing counselors in Washington to provide one-on-one counseling for up to 2,300 homeowners. The grant will also fund 100 statewide Homebuyer Education seminars. The funds will enable the state to continue providing services available through the Washington State Homeownership Hotline, 1-877-894-HOME.
• In conjunction with a nationwide sweep on deceptive practices, the Washington Attorney General’s Office sent letters in July 2010 to 138 businesses that market foreclosure assistance, loan modification services or other mortgage-related services to inform them about state laws.
• The Attorney General's Consumer Protection Division sent letters (Spanish translation) in fall 2008 to more than 14,000 properties that might be facing foreclosure because of missed mortgage payments. The letters warn homeowners about foreclosure rescue scams. County treasurers include a warning from the attorney general along with the certified foreclosure notices mailed to those who have neglected to pay property taxes. 

Related News Releases

Aug. 5, 2011: Washington Attorney General sues ReconTrust for illegal foreclosures

July 5, 2011: Families in foreclosure, mental health patients among those to benefit from Attorney General's settlements 

Aug. 24, 2010: Redefault rates on loan modifications are dropping, say state attorneys general and banking regulators 

Jan. 20, 2010: Attorneys general, state bank regulators urge more help to prevent foreclosures 

Sept. 17, 2009: Attorney General McKenna joins honchos in mortgage fraud huddle 

McKenna Editorial - Sept. 1, 2009: Attorneys lend a hand during a time of need 

July 15, 2009: State, federal sweep slams loan-mod scams 

McKenna Editorial - April 24, 2009: Feds must collaborate with states on bank regulation

More News Releases