New AG Olens wants power to investigate foreclosures

And an expert in property law predicts that Olens' proposal will be just one measure among several related to tightening up the state's foreclosure laws.

“There will be a great deal of legislative attention on mortgages and foreclosures in the upcoming session,” said Frank Alexander, real estate law professor at Emory University. "The incoming attorney general’s push certainly will add momentum to that legislative package."

Alexander, a critic of Georgia’s so-called nonjudicial foreclosure system, has proposed fundamental reforms of state laws, including requiring lenders to prove their case in court.

The ramifications of foreclosure stretch far beyond financial damage to an evicted former homeowner. Home repossessions drive down property values, reduce the property tax base and in some areas have resulted in neighborhoods riddled with vacancies and blight.

The attorney general has the power to prosecute mortgage fraud, but apparently not foreclosure fraud. Olens said he wants to change that, and he also said he might ask the State Bar of Georgia, which licenses lawyers, to look into allegations of misconduct by real estate attorneys in the mortgage origination as well as foreclosure process.

“We’re still working on our legislative agenda now, and frankly, that’s part of it,” Olens said. A senior leader in the office’s criminal division asked Olens recently to press for jurisdiction to cover foreclosure fraud.

Georgia is in the Top 10 nationally in foreclosure filings, and lenders completed more than 13,000 foreclosures in the first half of the year, a 29 percent jump from the same period in 2009. Bankers say involving the courts in foreclosure cases is unnecessary and would slow the process.

The nation’s mortgage companies and others that process foreclosures face growing scrutiny nationally about how they do business and whether their actions have run roughshod over borrowers.

Federal bank regulators and all 50 states are part of an investigation into the practices of the nation's major banks and mortgage servicers.

A growing number of lawsuits are alleging “robo-signing,” notary fraud and fraudulent documents in Georgia foreclosure cases.

Recently the watchdog over U.S. Bankruptcy Court started intervening in banks’ attempts to foreclose on defaulting Georgia borrowers, claiming that, in its opinion, the banks had not yet established rights to loans.

Industry insiders say any problems with documentation are merely technical in nature, and that borrowers are facing foreclosure because they haven't paid their loans.

Last week, a spokesman for outgoing Attorney General Thurbert Baker, said Baker's office lacks the jurisdiction to pursue many of the criminal claims alleged by struggling borrowers. These allegations instead would fall to local district attorneys to investigate.

“The Legislature strengthened the [attorney general’s authority in the] mortgage fraud area, but there is concern it isn’t sufficiently broad enough to cover these [foreclosure] issues,” Olens told The Atlanta Journal-Constitution.

Olens, a Republican and former Cobb County Commission chairman, will be sworn into office in January. He replaces Baker, who lost in last summer’s Democratic gubernatorial primary and did not seek re-election as attorney general.

Advocates for borrowers say cases of improper foreclosures are happening in Georgia, but they have largely gone unchecked because state law does not require court intervention.

When he enters office, Olens will pick up Georgia’s mantle in a national foreclosure investigation by the 50 state attorneys general.

Olens said “it would be to the state’s benefit” to have a statute permitting the attorney general’s office to investigate alleged foreclosure abuses, and that his push is not for political benefit.

Olens said he has met with borrower advocates who have shown him what they say is evidence of improper documentation.

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