Liveblogging of the Senate Banking Committee hearing on foreclosure fraud continues. Senator Richard Shelby was actually pretty good, but then Sens. Mike Johanns and Bob Bennett went to some length to try to pretend the banksters weren’t doing what they were doing.

This hearing is the latest example of national policymakers getting involved in the foreclosure fraud issue. The Congressional Oversight Panel warning of the enormous risk from the failures of servicers was the first report of its kind at the federal level to take full measure of the situation, and this is the first Congressional hearing. Senators on the Democratic side like Jeff Merkley and Sherrod Brown are sure to press the bank representatives aggressively on why foreclosure mitigation programs have failed, and why they used false documents to evict people from their homes. The ranking member on the Republican side, Richard Shelby, wants to investigate failures at the major loan servicers.

Let me make a rare statement: I agree with just about everything Sen. Richard Shelby (R-AL) said in his call for an investigation of mortgage servicers. But Shelby’s choice of targets sure does bear watching.

Ally Financial (the parent company of GMAC Mortgage) expanded their review of their foreclosure processes to all 50 states, the second mortgage servicer to do so after Bank of America; the Obama Administration supports the 40-state investigation by Attorneys General into foreclosure fraud.

Attorney General Cordray is going to need some time to prosecute this case. But he has an election coming up in a little over 3 weeks, against former Senator Mike DeWine. The latest poll shows him slightly behind, 44-38. It is imperative that Cordray and his team be given the time to reach discovery in this case and untangle the crooked web everyone suspects is at the heart of the mortgage lending industry.

In addition to seeking penalties from GMAC in the lawsuit for their violations of state laws and perpretration of fraud, Cordray wants a “preliminary and permanent injunction” against all foreclosures by GMAC in any pending case. If he were to file future lawsuits – and I believe he will – he would move to do the same in those cases. That would effectively end all foreclosure proceedings in Ohio, a judicial foreclosure state.

Yesterday, five homeowners in the state of Maine filed a class action suit against GMAC Mortgage, accusing them of filing knowingly false certifications for foreclosure, and false affadavits which back up the documents. Maine is one of the 23 states where judicial sign-off is required to move ahead with a foreclosure, and where GMAC (now Ally Financial) has suspended evictions.

As I mentioned yesterday, JPMorgan Chase, one of the nation’s largest banks, has suspended all its foreclosures in states that require judicial approval, while it reviews the foreclosure documents. We have some more information on that today, affecting 56,000 foreclosures.

When Ally Financial, formerly GMAC Mortgage, appeared to suspend foreclosure evictions in 23 states, they left out the ones where a judge is not required to sign off on foreclosures, including California, one of the four “sand states” with a massive amount of delinquencies and defaults. However, Attorney General Jerry Brown, who is running for Governor, has found a reason to demand a delay to any Ally/GMAC foreclosures: