Bank of America Becomes Latest Lender to Delay ForeclosuresOct 4, 2010 | Parker Waichman LLP
Bank of America has become the third large home loan lender to delay foreclosures in 23 states. Like GMAC Mortgage and JP Morgan Chase before it, the country’s largest bank is reviewing foreclosures to make sure documents it submitted to courts around the country were prepared properly.
According to a Washington Post report, a Bank of America employee admitted in a May deposition that she signed as many as 8,000 foreclosure documents a month without reviewing them. GMAC and JP Morgan Chase processors have made similar admissions.
A Bank of America spokesperson told the Associated Press that the lender isn’t able to estimate how many homeowners’ cases will be affected. According to a Bloomberg report, the review will likely involve “tens of thousands” of documents and the process will take from “several days to a couple of weeks.” The bank plans to resubmit corrected documents within several weeks.
The revelations by the lenders could provide an opening for homeowners in default to contest their foreclosures. If foreclosures were not properly done, families who bought the troubled homes could be vulnerable to claims by the former owners. Those concerns have led Old Republic National Title Insurance, among the nation’s largest title insurance companies, to announce it will no longer write new policies for homes foreclosed upon by J.P. Morgan Chase and GMAC Mortgage, or its parent, Ally Financial. If other title insurers follow suit, it could have a major impact on the housing market.
The entire foreclosure debacle is attracting more scrutiny from state and federal officials. According to Bloomberg, Acting Comptroller of the Currency John Walsh has asked the nation’s seven biggest lenders to review foreclosures for defective documents. The Connecticut Attorney General has asked the State Judicial Department to put a halt on home foreclosures for 60 days.
Last week, other home loan lenders were trying to reassure the public and government officials that the document problems were not an industry-wide issue. A Citigroup spokesperson told Bloomberg that it constantly reviews its document processes, “and we have strong training to ensure that appropriate employees are fully aware of the proper procedures.” In an emailed statement, a Wells Fargo official said “policies, procedures and practices satisfy us that the affidavits we sign are accurate.”