Bank of America Corp. became the latest firm to delay foreclosures as state officials stepped up pressure for a moratorium on evictions because lenders may have submitted faulty documents.
Bank of America will investigate all affidavits in cases that have not yet gone to judgment in 23 states where courts have jurisdiction over home seizures, spokesman Dan Frahm said. He estimated “tens of thousands” of the documents will be studied and the process will take from “several days to a couple of weeks.”
Banks are under pressure to halt foreclosures after court documents showed JPMorgan Chase & Co. and Ally Financial Inc. employees may have submitted affidavits supporting their claims without confirming their accuracy. Federal lawmakers and state officials have said such practices could amount to fraud. JPMorgan has said it will ask judges to postpone foreclosure rulings, while Detroit-based Ally said Sept. 21 its GMAC Mortgage unit would halt evictions.
Bank of America’s freeze “hopefully will give peace of mind to those monitoring the industry that we’ve used an abundance of caution that those foreclosures in process are handled correctly,” Frahm said in an interview. The Charlotte, North Carolina-based firm is not acknowledging that its associates have made errors in the foreclosure process, Frahm said.
“The extent of the problem is enormous,” said Max Gardner, a Shelby, North Carolina attorney who is involved in several lawsuits representing borrowers alleging improper loan servicing practices by banks. “It’s totally unrealistic for the bank to say they can complete this study in a couple of weeks.”
Attorneys general in at least six states are investigating borrowers’ claims that some of the nation’s largest home lenders and loan servicers have taken improper legal shortcuts to speed foreclosures. In Washington, Acting Comptroller of the Currency John Walsh asked the nation’s seven biggest lenders to review foreclosures for defective documents, according to the Housing Wire website.
Home foreclosures in Connecticut should be frozen for 60 days because of “defective” documents, Attorney General Richard Blumenthal said today in a request to the state Judicial Department. In California, Attorney General Jerry Brown said JPMorgan should be asked to prove its home foreclosures are legal, and must stop the practice if it can’t.
Citigroup, Wells Fargo
Citigroup Inc., the third-largest U.S. bank by assets, constantly reviews its document processes, “and we have strong training to ensure that appropriate employees are fully aware of the proper procedures,” said spokesman Mark Rodgers in an e-mailed statement. “Foreclosures are monitored to make certain that staffing is adequate to review the affidavits properly.”
Wells Fargo, ranked fourth by assets and the nation’s biggest home lender, said its “policies, procedures and practices satisfy us that the affidavits we sign are accurate,” according to an e-mailed statement yesterday from Vickee Adams at the San Francisco-based bank. “We will stand by our affidavits and, if we find an error, we will take the appropriate corrective action.”
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