Mortgages & Creative Financing

Bank of America Halts the Sale of Foreclosures in All 50 States

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In another sign of the mass chaos that has crippled the US housing market, the AP is reporting that as of today, BofA has halted all foreclosure sales throughout the United States. While this is great news for many people who are set to lose their homes, some even potentially wrongfully, it is not good news for the banking industry that has been at the center of the nation’s economic collapse over the course of the past few years.

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.

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“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.

The article goes on to describe how Renee Hertzler, an official from Bank of America disclosed that despite signing 7,000-8,000 foreclosure documents a month, she rarely read them. What I’d like to know is whether Ms. Hertzler is still employed by the bank, despite her revelations?

What about Mr. Frahm’s statements that he believes that the basis for the foreclosures that they have already executed is accurate? How is it possible that all these foreclosure documents weren’t read, and yet the bank still thinks that the foreclosures that they did execute were done in an appropriate manner?

One would think that Bank of America would have learned their lesson after the bubble popped, but it sounds like sheer incompetence continues to dominate the processes and proceedures followed by the company.

When Senator Dodd looks at the issue next month, will he and the Senate Banking Committee force BofA to go through ALL of their foreclosures to ensure they were properly executed, or will the need for expedience create a situation where the bank is not required to formally review them?

Are there going to be ANY consequences for the bank?

Apparently PNC, Ally Financial’s GMAC Mortgage unit and JPMorgan Chase & Co. have also halted foreclosures across parts of the US to ensure they are properly complying with State laws.

What kind of effects will all this have on the struggling housing market? It seems that this situation, coupled with the shadow inventory that we all know exists, will only act to slow down the recovery even more. The IMF predicted the recovery could take 8 years — what would their predictions be given all the recent news?


Photo: Taber Andrew Bain

Joshua Dorkin is a serial entrepreneur, investor, podcaster, publisher, educator, and co-author of
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    Replied over 9 years ago
    Does this mean we will have more time to pursue short sale options on the homeowners facing foreclosure?
    Jeff Brown
    Replied over 9 years ago
    Hey Josh — Though many excoriated me for saying so, months back, I thought two factors would emerge in the foreclosure world. 1. The courts would find, much to their political chagrin, that not only could the lender not come close to proving they indeed the rightful owner of the underlying promissory note, but that nobody could point with any certainty or with any empirically credible evidence, to ANYONE who legally owned the note. 2. That #1 would lead to a predictably tragic-comic political intervention which would just as predictably lead to unintended negative consequences. Of course, I aim the word ‘unintended’ solely at the politicians who’ve been consistently clueless from Day 1. The game now, as I see it, becomes a very high stakes version of Hide the Pea. The pea in the case is how they can clear the way for so many foreclosures when only the Lord knows who owns the notes in question. The powers that be are misdirecting the public’s attention to a so-called review of the docs, when in fact they’re madly scrambling to figure out how to allow all these foreclosures without a note owner. The IMF? Not a fan normally, but it seems someone saw this perfect storm coming long ago. Eight years indeed.
    Bernei Miller
    Replied over 9 years ago
    I know for a fact they were not executed correctly… My roommate worked in this department.. I also am one of the many millions that was screwed over by B of A… So if they want proof, come ask me.. I asked many times from Seantor Diane Feinstein to review my and many other’s cases that I knew where wrongfully completed.. Her response was this is a state level issue….I’m sorry? State level? Try Barney Franks and Dodds who are NOT state level..I finally did some research on the Seantor and what I found was her husband owns a business in the bay area dealing with foreclosures and makes millions off them. She is not the only seantor who is somewhat in the back pockets of the banks… most are….Read their bios