Bank of America Corp., the biggest U.S. bank by assets and deposits, delayed foreclosures after a federal regulator called for a review because lenders may have submitted defective documents when repossessing homes.
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, Dan Frahm, a spokesman for the bank, said yesterday. He estimated “tens of thousands” of documents will be studied and the process will take from “several days to a couple of weeks.”
Court documents showed JPMorgan Chase & Co. and Ally Financial Inc. employees may have submitted affidavits without confirming their accuracy. Federal lawmakers and state officials have said such practices could amount to fraud. JPMorgan 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 isn’t acknowledging that its associates made errors, Frahm said.
“The extent of the problem is enormous,” said Max Gardner, a Shelby, North Carolina, attorney representing borrowers alleging improper servicing practices by banks. “We have a problem in the housing market right now, given the inability to sell properties and declining property values, but the economic downside from this problem is even more monumental.”
State, Federal Action
Acting Comptroller of the Currency John Walsh this week asked the nation’s seven biggest lenders to review foreclosures for defective documents, spokesman Bryan Hubbard said. Attorneys general in at least six states are investigating claims that home lenders and loan servicers took shortcuts to speed foreclosures.
Home foreclosures in Connecticut should be frozen for 60 days because of “defective” documents, Attorney General Richard Blumenthal said 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.
Lenders took possession of a record 95,364 homes in August and issued foreclosure filings to 338,836 homeowners, or one of every 381 U.S. households, according to RealtyTrac, an Irvine, California-based data seller.
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,” spokesman Mark Rodgers said in an e-mailed statement. “Foreclosures are monitored to make certain that staffing is adequate to review the affidavits properly.”
Wells Fargo & Co., 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.”