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.
“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