Texas AG Halts Foreclosures Due to Questionable Banking Practices

TX DOB Industry Notices

Published October 11th, 2010

Detected March 18th, 2026

Summary

The Texas Attorney General has requested state-chartered banks and mortgage servicers to halt foreclosures due to questionable practices, such as signing documents without reading them or notarizing without presence. The Texas Department of Banking urges all state-chartered banks to review their foreclosure policies and procedures.

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What changed

The Texas Attorney General has issued a demand letter to various banks and mortgage servicers, requesting an immediate halt to foreclosures. This action stems from detected abuses in foreclosure processes, including signing documents without reading them, falsely claiming personal knowledge in affidavits, and notarizing documents without the signer's presence. While the Texas Department of Banking has not received direct complaints against state-chartered banks, it is using this notice to alert them to the situation and the Attorney General's actions.

State-chartered banks are required to review their existing foreclosure policies and procedures to ensure full compliance with applicable state laws. This notice serves as a directive to proactively address potential issues and mitigate risks associated with foreclosure practices. While no specific compliance deadline is stated, the urgency of the Attorney General's demand implies immediate attention is necessary.

What to do next

Review foreclosure policies and procedures for compliance with state law.

Source document (simplified)

INDUSTRY NOTICE 2010-0 Date: October 11, 2010 Foreclosures and Best Practices To: Chief Executive Officers of Texas State-Chartered Banks The economic stresses of today are well publicized and unfortunately in too many cases homeowners are being faced with losing their dwellings. While many lenders attempt to work with borrowers, some financial institutions have been forced to proceed with foreclosing on delinquent borrowers. In some cases, abuses have been detected and the Texas Attorney General has sent a demand letter to various banks and mortgage servicers requesting they halt foreclosures as a result of questionable practices. Practices in question include, but are not limited to, the signing of documents without reading them, signing affidavits which falsely claim personal knowledge of facts and notarizing documents without the signer’s presence. The Department has not received any complaints related to abusive or illegal foreclosure practices against state-chartered banks. However, the Department requests each of you to review your foreclosure policies and procedures to ensure compliance with applicable state law. Your continued cooperation is appreciated. If you have any questions, please contact Banking Commissioner Charles Cooper or Deputy Commissioner Robert Bacon at 512-475-1325. Resources: Foreclosure Resource Center (Dallas Federal Reserve) Attorney General Abbott Calls for a Halt on Foreclosures (Attorney General of Texas)