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Moratorium on Bank of America Forclosures

UPDATED to include PNC Financial’s reported foreclosure freeze and impending joint investigation of 40 states into servicers’ foreclosure procedures.

The nation’s largest mortgage lender, Bank of America announced Friday that it is expanding its foreclosure moratorium from 23 states, as announced by the bank last week, to include all 50 states.

The company explained in a statement, “Bank of America has extended our review of foreclosure documents to all fifty states. We will stop foreclosure sales until our assessment has been satisfactorily completed.”

The company added, “Our ongoing assessment shows the basis for 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.”
BofA called for a halt on foreclosures in certain states when evidence surfaced that its internal staff may not have followed the letter of the law in reviewing and processing case paperwork.

Such actions were spelled out in black and white when the Associated Press uncovered court documents with testimony from one of BofA’s top executives at a bankruptcy hearing in February. The exec admitted that she signed off on 7,000 to 8,000 foreclosure documents a month without even reading them or verifying their legitimacy.

Incidences of so-called “robo-signers” that have been blindly rubber-stamping approvals of foreclosure actions because of the sheer volume of cases landing on their desks has led to foreclosure suspensions by now, three other big lenders – and some in the industry warn that the problem could be even more widespread.

On September 20th, GMAC Mortgage was the first to halt foreclosures in 23 judicial states due to what it called an “internal procedural error.” JPMorgan Chase followed suit on September 30th. PNC Financial reportedly notified its industry partners that it is suspending foreclosures for 30 days in the judicial states while it reviews servicing procedures.

Consumer advocacy groups, state attorneys general, and federal lawmakers are all calling for a nationwide foreclosure freeze until the banks can clear up the paperwork issues in question.

Senate Majority Leader Harry Reid (D-Nevada) said he welcomed the decision announced by Bank of America to expand its foreclosure moratorium.

“I thank Bank of America for doing the right thing by suspending actions on foreclosures while this investigation runs its course,” Sen. Reid said in a statement. “It is only fair … to suspend foreclosures until a thorough review of foreclosure processes is completed and homeowners can be assured that their documents are being analyzed properly. I urge other major mortgage servicers to consider expanding the area where they have halted foreclosures to all 50 states as well.”
Members of Congress from both parties are petitioning for a federal investigation of mortgage servicers that have instituted foreclosure suspensions.

An announcement is expected to come as early as Tuesday of a joint investigation by attorney general offices in as many as 40 states. Bloomberg reports that the coordinated effort will be led by Iowa Attorney General Tom Miller.