BofA Freezes All U.S. Foreclosures to ‘Clear the Air’
Bank of America Corp., the biggest U.S. lender, extended a freeze on foreclosures to all 50 states as concern spread among federal and local officials that homes are being seized based on false data.
Bank of America, JPMorgan Chase & Co. (JPM) and Ally Financial Inc. (ALLY) already froze foreclosures in 23 states where courts supervise home seizures amid allegations that employees used unverified or false data to speed the process. Bank of America’s new policy extends its moratorium to the entire nation, and the announcement spurred more demands from public officials and community groups for other banks to follow suit.
“All mortgage providers should follow the example of Bank of America and review their practices to ensure that they are not unfairly targeting homeowners in Nevada and across the nation,” Senate Majority Leader Harry Reid, a Democrat from Nevada, said today in a statement.
PNC Financial Services Group Inc. (PNC) halted sales of foreclosed homes for a month to review documents in its mortgage servicing procedures, according to an Oct. 4 memo the Pittsburgh-based bank sent to lawyers handling the lender’s foreclosures.
“We will stop foreclosure sales until our assessment has been satisfactorily completed,” the Charlotte, North Carolina-based company said today in a statement. “Our ongoing assessment shows the basis for foreclosure decisions is accurate.”
At least seven states are investigating claims that home lenders and loan servicers took shortcuts to speed foreclosures. Attorneys general in Ohio and Connecticut have said some of the practices used by banks to take away homes may amount to fraud. Acting Comptroller of the Currency John Walsh last week asked the nation’s seven biggest lenders to review foreclosures for defective documents, spokesman Bryan Hubbard said.
“Bank of America has done the right thing by stopping foreclosures in all 50 states,” North Carolina Attorney General Roy Cooper said today in a statement. “Other banks that have questionable procedures should do the same while the investigation continues.”
President Barack Obama’s administration didn’t pressure the bank to enact the freeze, Moynihan said.
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 Inc., an Irvine, California-based data vendor.
Wells Fargo spokeswoman Vickee Adams said the lender is still processing foreclosures and referred to a statement the bank put out earlier this week, saying “our affidavit procedures and daily auditing demonstrate that our foreclosure affidavits are accurate.”
“Bank of America has made the right choice given the circumstances of this scandal,” said Kevin Stein, associate director of the California Reinvestment Coalition in San Francisco. “The primary concern for all of these banks should be to figure out where they are handling foreclosures illegally before they erroneously and unfairly take another family’s home.”
In Washington, dozens of lawmakers in Congress have called for a freeze on foreclosures and are seeking investigations. House Oversight and Government Reform Committee Chairman Edolphus Towns yesterday demanded a moratorium and asked New York State Attorney General Andrew Cuomo to investigate allegations of fraud. Towns, a New York Democrat, led hearings last year into Bank of America’s federal bailouts.
“The implications of ignoring the foreclosure problems are far too great to be ignored,” Towns said in a statement. “Bank of America did the right thing today and I expect to see every other responsible banking institution follow their lead.”
On Wednesday, two members of the House Financial Services Committee, Luis Gutierrez of Illinois and Dennis Moore of Kansas, asked the Special Inspector General of the Troubled Asset Relief Program to investigate foreclosure practices.
“There is already enough evidence of unwarranted foreclosures and irregularities by lenders and servicers to warrant full investigations into the practices of these financial institutions,” the lawmakers wrote in a letter.
A coalition of community organizer groups and labor unions, including the National People’s Action and the Service Employees International Union, called for a national freeze on foreclosures.
“It is unconscionable that Wall Street banks continue to use a corrupt and fraudulent procedure to flood the housing market with illegal foreclosures that are throwing millions of American families out of their homes,” the groups said in a statement today. “It’s the latest example of a predatory industry.”
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