Bank of America to Lift Foreclosure Freeze in 23 States Next Week
Analyst says bank may be "turning a corner" in foreclosure mess.
Oct. 19, 2010— -- As the nation's largest bank inched toward a possible remedy in the foreclosure epidemic, some analysts doubted that the federal government would step in -- yet again -- to bail out financial institutions blamed for a sea of corrupt paperwork that caused people to lose their homes.
Bank of America said it will effectively lift its foreclosure freeze Monday when it begins resubmitting foreclosure documents to courts in 23 states. The bank said the new documents will be used in 102,000 foreclosure actions in which judgment is pending in those states.
"If they can support the documentation, that sure sounds like turning a corner to me," said Lawrence White, an economics professor at New York University's Stern School of Business. "If they can support that, at least for them, that sounds like the way out of a tunnel."
In recent weeks, major lenders such as JPMorgan Chase, Ally Financial's GMAC Mortgage unit and Bank of America have conceded that paperwork supporting an unknown number of foreclosures contain errors ranging from wrong dates to forged or inconsistent signatures.
In some instances, banks allegedly used "robo-signers" to approve hundreds of documents a day without first verifying the information in them.
U.S. regulators, meanwhile, said they were moving ahead with their investigation into whether shoddy practices by the banks caused some people to be kicked out of their homes.
Bank of America had halted foreclosures in all 50 states after evidence emerged that employees didn't read the documents they had filed during the process. The bank said on Monday that it plans to resume foreclosures next week in 23 states that require a judge's approval to restart the foreclosure process. The company says it will continuing delaying about 30,000 foreclosures in 27 states that don't require a judge's approval.
, discussed the foreclosure issue in introductory remarks and while answering questions from analysts on a conference call Tuesday to discuss the bank's earnings with investors:"It's going to take us three to five weeks to get through and actually get all of this taken care of. The teams reviewing the data have not found information which was inaccurate which would affect the plain facts of the foreclosure," Brian Moynihan, BofA's CEO, said Tuesday.
"Of the foreclosure sales that took place in the second quarter, 33 percent of those properties were vacant, 80 percent had not made a payment for a year. The delinquency averaged 1.5 years for those customers and reflected the very tough times that these consumers are going through, 50 percent were unemployed or lost their income."
Faulty Disclosures
John Walsh, acting director of the Office of the Comptroller of the Currency, which oversees large national banks, said interagency teams were looking into whether any homeowners had been harmed by faulty, and possibly illegal, foreclosure procedures. A separate investigation is being conducted by the attorneys general of all 50 states.
"We will look at the process, we will look at the validity of what was done and then ultimately we will look at harm to homeowners," Walsh told reporters after a speech at the American Bankers Association's annual meeting in Boston. The interagency teams include the Federal Reserve and the Federal Deposit Insurance Corp.
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