BofA, others look for flaws in process
WASHINGTON – Bank of America on Friday halted foreclosures on homes across the country so it could review paperwork in tens of thousands of cases for flaws.
The move came as PNC Financial Services became the fourth major bank to announce that it would stop foreclosures in at least some states. It added to growing concerns that mortgage lenders have been evicting homeowners despite flawed court papers.
Bank of America, the largest U.S. bank, had said a week earlier it would stop foreclosures in the 23 states where the process must be approved by a judge. Ally Financial and JPMorgan Chase had announced similar plans.
Bank of America’s nationwide halt will apply to homes that the bank is taking back itself and those for which it has transferred the papers to mortgage buyers Fannie Mae and Freddie Mac.
The bank said it had not found any widespread problems in the foreclosure process, but “We’ll go back and check our work one more time,” CEO Brian Moynihan said.
A Bank of America spokesman acknowledged that the bank acted in response to pressure from state attorneys general and other public officials inquiring about the accuracy of foreclosure documents.
A document obtained last week by the Associated Press showed a Bank of America official acknowledging in a legal proceeding that she signed thousands of foreclosure documents a month and typically did not read them. The official, Renee Hertzler, said in a February deposition that she signed up to 8,000 such documents a month.
The bank said it would take a few weeks to tackle the problem. It did not say how many foreclosure cases would be affected but estimated the figure would be in the tens of thousands.
The decision should help Bank of America manage its image during a dicey time for the industry, said Michael Robinson, a crisis communications expert with Levick Strategic Communications. Banks have been the target of widespread public anger since the financial meltdown.
“All the other banks are going to end up there anyway, either because they’re going to be forced, or by political pressure,” he said. “Americans, otherwise known as customers and voters, aren’t over the economic crisis. You don’t want to become a political piñata.”
Banking and housing analysts fear the foreclosure document problems could prolong the slow recovery in the housing market. Even if foreclosure is inevitable for tens of thousands of homes, the process could now drag out for years.
The suspension in foreclosures could prop up home prices in the short term because fewer cheap homes would pour onto the open market in coming months. When those properties ultimately do go up for sale, the overall economy could be in better shape.