Need to refile

Citigroup may need to refile thousands of foreclosure documents

Citigroup Inc., which has proceeded with foreclosures as some rivals stopped to recheck documents, said it may need to refile affidavits in cases that began before an overhaul of its procedures.

The lender is reviewing 10,000 affidavits that were executed before a reorganization of foreclosure operations was completed in February, Harold Lewis, a managing director with the CitiMortgage lending unit said in written testimony for a congressional hearing today. About 4,000 affidavits may not have been signed before a notary and may be resubmitted, he said.

Citigroup has defended its procedures and continued to seize homes after borrowers accused the country's biggest banks of seeking foreclosures without fully reviewing loan documents. The New York-based bank's overhaul improved training and limited the volume of paperwork processed by staff, Lewis said. Flaws uncovered don't warrant a sweeping delay, he said.

"The changes and safeguards implemented this year give Citi confidence that there are no systemic issues in its existing foreclosure processes," he said in comments to be delivered at a House Financial Services Committee hearing on foreclosures. "Citi has not suspended its foreclosure process and believes there is no reason to do so."

Probes, Hearings

Attorneys general in all 50 states began a coordinated probe in October into whether banks and loan servicers used false documents and signatures on foreclosures. Bank of America Corp., the largest U.S. lender, and JPMorgan Chase & Co. temporarily halted or delayed some repossessions to review their practices. Wells Fargo & Co. said last month that it would file new affidavits in about 55,000 proceedings in 23 states.

Lawmakers are questioning regulators and banking officials about what actions they have taken to ensure that foreclosures were fair and legal.

Executives from Charlotte, North Carolina-based Bank of America, and New York-based JPMorgan were questioned by the Senate Banking Committee Nov. 16. Regulators, including officials from the U.S. Treasury Department and the Federal Reserve, are also scheduled to testify at today's hearing.

Lewis also said Citigroup is transferring 8,500 pending files out of the Law Offices of David J. Stern PA, the Florida foreclosure firm which has said it's being investigated by the state's attorney general. Other legal counsel will prepare and refile affidavits for those cases, Lewis said. The bank said last month it had stopped using Stern.

(Published by Bloomberg - November 18, 2010)

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