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Government officials to look into mortgage lenders

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Iowa Attorney General Tom Miller called on three major mortgage companies to halt pending foreclosure proceedings in the state while under investigation for improper submissions of foreclosure documents in Iowa courts.

The attorney general’s office has contacted Ally Financial Inc., formerly GMAC Inc., Bank of America Corp. and JPMorgan Chase & Co. to request that the companies suspend pending foreclosure proceedings, evictions and sheriff’s sales in Iowa.

Miller announced a civil investigation into Ally on Sept. 24, after the company revealed it had filed improper foreclosure affidavits in Iowa courts.

“There appears to be an emerging pattern of careless and perhaps cavalier attitudes by a growing number of lenders when it came to taking people’s homes,” Miller said at a news conference on Thursday. “This is an affront to Iowans facing foreclosure, and it’s also an affront to Iowa’s court system.”

The U.S. Justice Department said on Wednesday that it was probing reports that the nation’s top mortgage lenders improperly evicted struggling borrowers from their homes, Reuters reported.

Attorney General Eric Holder said the Justice Department would look into media reports that loan servicers have improperly used “robo-signers” to process foreclosure orders, stepping into a controversy that has forced at least three banks to halt eviction proceedings and prompted calls for an industrywide moratorium on home repossessions until the problems are fixed.

The move takes aim at one of the most visible signs of the U.S. economic crisis, which saw hundreds of thousands of families lose their homes.