WASHINGTON, DC-Two mortgage lenders, Bank of America and GMAC
Mortgage, are resuming foreclosures after temporarily stopping them 
in the wake of reports that the paperwork and processes may not have
 met the letter of the law. Both banks say they have found nothing 
improper in their methodologies, and in the case of Bank of America, 
new affidavits have been prepared to resume the foreclosures.

Improperly prepared affidavits by mortgage lenders and servicers--also known as 
the robosigned documents--were at the heart of this latest episode in the country’s long-standing housing crisis.
 Other motivations by the banks, at least as suggested by the Wall
 Street Journal, insinuate that they are, in fact, becoming increasingly worried that this problem could spin out of control.
The Journal labeled the move a counterattack by the banks, which are
 hoping to stem a growing financial and political threat.

Certainly, the 
fact that an election is days away--and the banks have become
 politicians’ favorite punching bag--is not lost on the institutions. However, whether this is an act of bravado--or a genuine belief
 that the banks are in the right--it is not likely that this move will put the 
issue to rest.

The real threat to the mortgage industry is not the Obama Administration--which is, in fact, loath to hinder these foreclosures--but rather the attorneys general around the nation that have launched 
investigations into this issue. Already, several state courts are
 undermining key elements to mortgage servicers’ cases; namely, Mortgage Electronic Registration Systems’ role in foreclosures.

A
 ubiquitous player in the mortgage foreclosure industry, supreme courts 
in Arkansas, Kansas and Maine have found that MERS does not have the
 proper standing to bring about foreclosures under their states’ laws. In other states, though, MERS has won victories, such as in Minnesota’s supreme court. This is not a happy state of affairs for the industry, which would
 likely move to a resolution faster if the federal government were 
leading the charge.

The lending markets will find themselves 
constrained if states continue to take the regulatory lead on this 
issue, Brooklyn Law School professor David Reiss told GlobeSt.com in
 an earlier interview. “The TV images of banks evicting homeowners when 
they can’t even prove that they own the mortgage are enraging
 people--it is hard to imagine that change is not in the offing,” he
 says. “If the federal government does not step in, states will act in 
a variety of ways to push the mortgage industry to operate with real
legal process.”