The Securities and Exchange Commission has begun to consider the possibility that the giant foreclosure mess sweeping the nation is not merely a matter of a couple isolated incidents of stupidity on the parts of banks and perhaps shady practices are widespread throughout the industry. Reuters reports on the latest round of subpoenas headed for big players like Bank of America (BAC), JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo:
The subpoenas focus on the earliest stage of the mortgage securitization process, said the sources, who requested anonymity because the probe is not public.
The sources said the SEC is asking for information about the role of so-called “master servicers” — specialized firms that oversee the selection and maintenance of the large pool of home loans that go into every mortgage-backed bond.
Regulators are also taking a new approach to the banks. Whereas in the past they focused on the poorly executed paperwork banks were using to evict people from their homes, now they’re also examining whether banks properly handled mortgages when turning them into bonds. This investigation is distinct from the one about banks misrepresenting the value of their mortgage-related assets to investors that yielded a big settlement from former Countrywide exec Angelo Mozilo. Readers can be forgiven for getting confused; when it comes to alleged misconduct by bankers in the housing market, there’s a lot to keep track of.
mtaylor [at] observer.com | @mbrookstaylor