Bank of America Corp., the biggest U.S. lender, extended a freeze on foreclosures to all 50 states as concern spread among federal and local officials that homes are being seized based on false data.
“We just want to clear the air,” Bank of America Chief Executive Officer Brian T. Moynihan said today in a speech to the National Press Club in Washington.
Bank of America, JPMorgan Chase & Co. and Ally Financial Inc. already froze foreclosures in 23 states where courts supervise home seizures amid allegations that employees used unverified or false data to speed the process. Bank of America’s new policy extends its moratorium to the entire nation, and the announcement spurred more demands from public officials and community groups for other banks to follow suit.
“All mortgage providers should follow the example of Bank of America and review their practices to ensure that they are not unfairly targeting homeowners in Nevada and across the nation,” Senate Majority Leader Harry Reid, a Democrat from Nevada, said today in a statement.
PNC Financial Services Group Inc. halted sales of foreclosed homes for a month to review documents in its mortgage servicing procedures, according to an Oct. 4 memo the Pittsburgh-based bank sent to lawyers handling the lender’s foreclosures.
Bank of America fell 13 cents, or 1 percent, to $13.18 at 4 p.m. in New York Stock Exchange composite trading. The shares have lost 12 percent this year.
“We will stop foreclosure sales until our assessment has been satisfactorily completed,” the Charlotte, North Carolina- based company said today in a statement. “Our ongoing assessment shows the basis for foreclosure decisions is accurate.”
At least seven states are investigating claims that home lenders and loan servicers took shortcuts to speed foreclosures. Attorneys general in Ohio and Connecticut have said some of the practices used by banks to take away homes may amount to fraud. Acting Comptroller of the Currency John Walsh last week asked the nation’s seven biggest lenders to review foreclosures for defective documents, spokesman Bryan Hubbard said.
“Bank of America has done the right thing by stopping foreclosures in all 50 states,” North Carolina Attorney General Roy Cooper said today in a statement. “Other banks that have questionable procedures should do the same while the investigation continues.”
President Barack Obama’s administration didn’t pressure the bank to enact the freeze, Moynihan said.
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One Response
This is NOT exactly an act of charity by the banks. Foreclosing without the correct paperwork runs a risk of not only “losing” (and being ordered to pay the other side’s legal fees), but of ending up in a situation whereby they lose their secured interest (meaning they’ll have to share the proceeds of the house with other creditors), and worse, that they won’t be able to sell a clear insurable title, meaning they get the house in foreclosure but won’t be able to sell it to someone. It’s in the banks’ economic interest to slow down and to the foreclosure paperwork in a proper and legal manner.