Sun, Oct 03, 2010 - Page 11 News List

Bank of America delays foreclosures

‘STEAMROLLER’: ‘Hundreds of thousands’ of foreclosures in the US may have been conducted using fraudulent documents by entities without the right to foreclose

AP, WASHINGTON

People wait to speak with a bank consultant at the Los Angeles Convention Center to restructure their mortgages at the US’ largest loan modification event, which is part of the Neighborhood Assistance Corporation of America’s “Save the Dream” tour, in Los Angeles on Thursday. The five-day event, where homeowners can restructure their mortgages to avoid foreclosure, brings together struggling homeowners and major banks.

PHOTO: AFP

Bank of America is delaying foreclosures in 23 US states as it examines whether it rushed the foreclosure process for thousands of homeowners without reading the documents.

The move adds the nation’s largest bank to a growing list of mortgage companies whose employees signed documents in foreclosure cases without verifying the information in them.

Bank of America isn’t able to estimate how many homeowners’ cases will be affected, Dan Frahm, a spokesman for the Charlotte, North Carolina-based bank, said on Friday. He said the bank plans to resubmit corrected documents within several weeks.

Two other companies, Ally Financial Inc’s GMAC Mortgage unit and JPMorgan Chase, have halted tens of thousands of foreclosure cases after similar problems became public.

The document problems could cause thousands of homeowners to contest foreclosures that are in the works or have been completed.

If the problems turn up at other lenders, a foreclosure crisis that’s already likely to drag on for several more years could persist even longer. Analysts caution that most homeowners facing foreclosure are still likely to lose their homes.

State attorneys general, who enforce foreclosure laws, are stepping up pressure on the industry.

On Friday, Connecticut Attorney General Richard Blumenthal asked a state court to freeze all home foreclosures for 60 days. Doing so “should stop a foreclosure steamroller based on defective documents,” he said.

And California Attorney General Jerry Brown called on JPMorgan to suspend foreclosures unless it could show it complied with a state consumer protection law. The law requires lenders to contact borrowers at risk of foreclosure to determine whether they qualify for mortgage assistance.

In Florida, the state attorney general is investigating four law firms, two with ties to GMAC, for allegedly providing fraudulent documents in foreclosure cases. The Ohio attorney general asked judges this week to review GMAC foreclosure cases.

In New York, State Attorney General Andrew Cuomo is reviewing the matter “to prevent home-owners from being improperly removed from their homes,” according to a spokesman, Richard Bamberger, who said on Friday that Cuomo’s office has been in contact with several of the financial institutions.

Mark Paustenbach, a US Department of the Treasury spokesman, said the Treasury has asked federal regulators “to look into these troubling developments.” And the Office of the Comptroller of the Currency, which regulates national banks, has asked seven big banks to examine their foreclosure processes.

“We both want to see that they fix the processing problems, but also to look to see whether there is specific harm” to homeowners, John Walsh, the agency’s acting director told lawmakers on Thursday.

A document obtained by reporters on Friday showed a Bank of America official acknowledging in a legal proceeding that she signed up to 8,000 foreclosure documents a month and typically didn’t read them.

The official, Renee Hertzler, said in a February deposition that she signed 7,000 to 8,000 foreclosure documents a month.

“I typically don’t read them because of the volume that we sign,” Hertzler said.

She also acknowledged identifying herself as a representative of a different bank, Bank of New York Mellon, that she didn’t work for.

Bank of New York Mellon served as a trustee for the investors holding the homeowner’s loan.

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