Monday, October 11, 2010

B of A halts foreclosure sales in all 50 states

(Re-blogged - this article was written by Kathleen Pender)

Bank of America has decided to temporarily halt foreclosure sales in all 50 states.
In a statement, spokeswoman Dan Frahm said, "Bank of America has extended our review of foreclosure documents to all 50 states. We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for our past foreclosure decisions is accurate. We continue to serve the interests of our customers, investors and communities. Providing solutions for distressed homeowners remains our primary focus."

A spokeswoman elaborated that BofA will continue the foreclosure process on delinquent borrowers, but will not proceed to judgment or with a foreclosure sale at this time. Foreclosure sales scheduled for Saturday, Oct. 9 or later will be stopped and rescheduled at a later date. The bank estimates it will begin rescheduling foreclosure sales on Nov. 1 or earlier.

BofA was one of three banks, along with GMAC Mortgage and JPMorgan Chase, that halted certain forclosure activities in 23 states where foreclosures are handled in court. The banks made the move after it came out in testimony and depositions that some of their employees had "robo-signed" court documents they hadn't really read.

California, where most foreclosures are handled out of court, was not among the 23 states. However, Attorney General Jerry Brown had called on Chase and GMAC (part of Ally Financial) to stop foreclosing on homes in California unless they can immediately prove they are complying with a state law that requires them to try to contact borrowers to discuss modifications and other alternatives before foreclosing.

California Assembly member Ted Lieu, D-Torrance, this week called on the two state agencies that oversee banks (the Department of Corporations and the Department of Financial Institutions) to impose a 60-day moratorium on foreclosures so that they can investigate whether lenders in California are following that law and another that requires them to have and follow a modification plan.
This week, House speaker Nancy Pelosi and other California Democrats wrote a letter to U.S. Attorney General Eric Holder and others asking them to investigate to investigate "possible violations of law or regulations by financial institutions in their handling of delinquent mofigages, mortgage modifications, and foreclosures."

Some real estate experts say a foreclosure moratorium could cause home prices to rise temporarily as foreclosed homes, which are usually priced at a discount to homes not in foreclosure, are taken off the market.

"In the short term it will keep foreclosures from happening," and that could create an "artificial" boost in prices, says G.U. Kruger, chief economist with HousingEcon.com. But it also could "prolong the malaise" in the real estate market, says Brad Kemp, director of regional research at Beacon Economics.

Consumer groups have come out in favor of a nationwide moratorium to make sure that homeowners are not forced out of their homes based on faulty paperwork. Consumers Union said today that "lenders and servicers should be required to stop all foreclosures until they can demonstrate compliance with all laws, regulations, contract guidelines, and stated internal policies, related to foreclosure, loan modifications, and other forms of foreclosure avoidance."

For more on the subject, see my Tuesday column here.
Posted By: Kathleen Pender (Email) | October 08 2010 at 10:17 AM
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