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BofA halts foreclosure sales in 50 states

Posted October 8, 2010

— Potential flaws in foreclosure documents are threatening to throw the real estate industry into a full-blown crisis, as Bank of America on Friday became the first bank to stop sales of foreclosed homes in all 50 states.

The move, along with another decision on foreclosures by PNC Financial Services Inc., adds to growing concerns that mortgage lenders have been evicting homeowners using flawed court papers.

Charlotte, N.C.-based Bank of America Corp., the nation’s largest bank, said Friday it would stop sales of foreclosed homes in all 50 states as it reviews documents used to process foreclosures. A week earlier, the company had said it would only stop such sales in the 23 states where foreclosures must be approved by a judge.

“We will stop foreclosure sales until our assessment has been satisfactorily completed,” company spokesman Dan Frahm said in a statement. “Our ongoing assessment shows the basis for our past foreclosure decisions is accurate.”

Bank of America did not disclose how many homeowners would be affected.

“Bank of America has done the right thing by stopping foreclosures in all 50 states. Other banks that have questionable procedures should do the same while the investigation continues,” North Carolina Attorney General Roy Cooper said in a statement.

Cooper's office has asked 15 mortgage lenders to halt pending foreclosures in North Carolina while officials review whether paperwork was handled properly in the cases.

State and federal officials have been ramping up pressure on the mortgage industry over worries about potential legal violations amid growing evidence that mortgage company employees or their lawyers signed documents in foreclosure cases without verifying the information in them. Also Friday, Sen. Christopher Dodd, D-Conn, the chairman of the Senate Banking Committee, said he would hold a hearing on the issue next month.

“American families should not have to worry about losing their homes to sloppy bureaucratic mismanagement or fraud,” Dodd said. “Regulators at the federal, state, and local levels have a responsibility to uphold the law and protect consumers from unfair foreclosure, and lenders have a duty to not cut corners around the law.”

A document obtained last week by the Associated Press showed a Bank of America official acknowledging in a legal proceeding that she signed thousands of foreclosure documents a month and typically didn’t read them. The official, Renee Hertzler, said in a February deposition that she signed 7,000 to 8,000 foreclosure documents a month.

Earlier in the week, Senate Majority Leader Harry Reid, D-Nev., urged five large mortgage lenders to suspend foreclosures in Nevada until they have set up systems to make sure homeowners aren’t “improperly directed into foreclosure proceedings.” Nevada is not among the states where banks had suspended foreclosures.

Also Friday, PNC Financial Services Group Inc. said it is halting most foreclosures and evictions in 23 states for a month so it can review whether documents it submitted to courts complied with state laws. An official at the Pittsburgh-based bank confirmed the decision on Friday, which was reported earlier by the New York Times. The official requested anonymity because the decision hasn’t been publicly announced.

PNC becomes the fourth major U.S. lender to halt some foreclosures amid evidence that mortgage company employees or their lawyers signed documents in foreclosure cases without verifying the information in them.

In addition to PNC and Bank of America, Ally Financial’s GMAC Mortgage unit and JPMorgan Chase & Co. have announced similar moves in the past two weeks.

In some states, lenders can foreclose quickly on delinquent mortgage borrowers. By contrast, the 23 states use a lengthy court process. They require documents to verify information on the mortgage, including who owns it.

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  • unc70 Oct 8, 2010

    A WARNING to those using online banking at BofA, probably other banks. Before you can logon to online banking at BofA, you MUST agree to a new "Electronic Communications Disclosure" and give up (waive) essentially all your rights for notifications in writing provided under various consumer protection laws, prior agreements with BofA, ML, and other related entities now and in the future. They then only need place the notice on their web site or send it in an email; while you might still have the option now to request some items by post, BofA can decide which notices it will deliver by mail (in addition to electronically).

    That means that printed monthly statements and such can be replaced by online-only without you taking further action.

    If you decide to quit using their online banking rather than accept the new terms, use the one access under old terms to view and print (or download PDF) anything on the account that you think you might ever need.

  • larieke Oct 8, 2010

    Stopping foreclosure "sales" of homes and stopping the foreclosure process are two different things. Roy Cooper you are also an attorney. Does B of A mean they will stop selling the already foreclosed homes of those already evicted, or is B of A going to stop the foreclosure process?

  • Capitals Fan Oct 8, 2010

    Yep, they are crooks. But I am glad that the innocent people who don't make their house payment for 9 months, destroy the home on purpose, and then refuse to leave even after legal action is in process are well protected. They deserve it after all.

  • IceCreamMan Oct 8, 2010

    so glad we bailed these crooks out.