by Broderick Perkins
(10/13/2010) Bank of America recently became the first bank to stop sales of foreclosures in all 50 states as 49 states teamed up to investigate mortgage lenders' foreclosure procedures.
State attorneys general are concerned that lenders are kicking out homeowners with questionable foreclosure documents.
They are investigating charges that employees dubbed "robo-signers" had vouched for the accuracy of foreclosure documents without reading them, among other infractions.
Along with BofA, PNC Financial Services Inc., Ally Financial's GMAC Mortgage and JPMorgan Chase also recently halted foreclosures in some states amid evidence employees or legal staff signed foreclosure documents without verifying information.
A BofA statement reads: "Bank of America has extended our review of foreclosure documents to all fifty states. We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for our past foreclosure decisions is accurate. We continue to serve the interests of our customers, investors and communities. Providing solutions for distressed homeowners remains our primary focus."
It's not known how many homeowners are affected, but California's Attorney General Edmund G. Brown called on all lenders in California to halt foreclosing on California homes until they can demonstrate that they are complying with state law.
Earlier, Brown sent letters to Ally Financial and J.P. Morgan Chase directing them either to prove they are in compliance with state law or stop foreclosures.
His office also has been in discussions with other lenders, including Wells Fargo, One West and Bank of America.
"While California continues its own vigorous efforts to ensure that homeowners facing foreclosure are treated fairly and lawfully, we are now working together with other attorneys general and regulators to seek solutions that reach across state lines to protect all borrowers at risk of losing their homes in this foreclosure crisis," Brown said.
The state level joint investigation is being headed by Iowa Attorney General Tom Miller and plans to review how lenders verify foreclosure documents nationally. States have already started examining whether mortgage servicers have submitted improper affidavits or other foreclosure documents.
Foreclosure laws vary by state. California law prohibits lenders from recording notices of default on mortgages made between Jan. 1, 2003, and Dec. 31, 2007, unless - with certain exceptions - the lender contacts or tries diligently to contact the borrower to determine eligibility for loan modification. Any notice of default must include a declaration of compliance with California law.
U.S. Sen. Christopher Dodd (D-CT), the chairman of the Senate Banking Committee, recently said he would hold a hearing on the matter next month.
Dodd told the Associated Press, "American families should not have to worry about losing their homes to sloppy bureaucratic mismanagement or fraud."
"Regulators at the federal, state, and local levels have a responsibility to uphold the law and protect consumers from unfair foreclosure, and lenders have a duty to not cut corners around the law," he added.
Other related articles: