States to investigate foreclosure paperwork

The attorneys general of up to 40 states plan to announce a joint investigation this week into banks' alleged use of flawed foreclosure paperwork, a person briefed on the investigation told Reuters Sunday.

The person said an announcement could come as early as Tuesday. The plans for a joint inquiry were reported earlier by Bloomberg News.

Meanwhile Sunday, senior White House adviser David Axelrod questioned the need for a blanket stoppage of all home foreclosures, even as pressure grows on the Obama administration to do something about mounting evidence that banks have used inaccurate documents to evict homeowners. He was speaking on CBS' "Face the Nation."

"It is a serious problem," said Axelrod, who contended that the flawed paperwork is hurting the nation's housing market as well as lending institutions. But he added, "I'm not sure about a national moratorium because there are in fact valid foreclosures that probably should go forward" because their documents are accurate.

On Friday, Bank of America became the first bank to halt foreclosures in all 50 states. JPMorgan Chase & Co., Ally Bank's GMAC Mortgage unit and PNC Financial have stopped foreclosures in the 23 states where foreclosures must be approved by a judge.

Axelrod said Sunday that the administration is pressing lenders to accelerate their reviews of foreclosures to determine which ones have flawed documentation.

A joint investigation by 40 states would further escalate pressure on banks to widen their suspensions of foreclosures. The joint effort is not expected to include a call for a moratorium, a source said, though some attorneys general have already done so in their own states.

U.S. Attorney General Eric Holder has said the government is looking into the matter.