Bank of America Expands Foreclosure Expansion to All 50 StatesOct 11, 2010 | Parker Waichman LLP
Bank of America announced on Friday that its foreclosure moratorium was going nationwide. Earlier this month, the nation’s largest bank had announced it was suspending foreclosures in 23 states to make sure documents it submitted to courts in those states were prepared properly. Bank of America services 14 million mortgages, or one out of every five in the US.
GMAC Mortgage, JP Morgan Chase and PNC Bank recently took similar action in regards to foreclosures in 23 states where home seizures require a court order. The banks’ actions came after it was learned that some mortgage servicers employed people who could sign foreclosure affidavits so quickly they popularized a new term for them: “robo-signer.” In depositions taken by lawyers for embattled homeowners, some robo-signers said they or their team had signed 10,000 or more foreclosure affidavits a month. Those affidavits say the preparer personally reviewed the files, but in their depositions, the workers acknowledge they had no time to actually do that. In some cases, the affidavits weren’t properly notarized.
According to a report in The Wall Street Journal, Bank of America decided to expand its 23-state moratorium on foreclosures and foreclosure sales to the entire nation due to pressure from Freddie Mac, the government-run housing-finance giant. Freddie Mac, along with Fannie Mae, owns many of the mortgages serviced by banks like Bank of America.
During a call with Bank of America and several other institutions, officials from Freddie Mac asked the banks to look at foreclosure documentation across all 50 states, and consider putting a stop to the entire foreclosure process, the Journal said.
Bank of America Chief Executive Brian Moynihan told the Journal that the bank hasn’t found problems in its foreclosure process, but opted to temporarily halt all foreclosures to “clear the air.” He said the bank wants to “go back and check our work one more time.”
JP Morgan isn’t expanding its foreclosure moratorium, but is widening its document review beyond the 23 states where it has frozen foreclosures, according to the Journal.
Meanwhile, more investigations into the foreclosure debacle were launched over the past week. According to a Reuters report, more than two-thirds of US state attorneys general plan this week to launch a joint probe of improper foreclosures. The deadline for attorneys general to sign on to the investigation effort led by Iowa’s Tom Miller was at the end of business today, so a formal announcement could be made tomorrow. The joint effort is not expected to include a call for a moratorium, Reuters said.