Bank of America freezes foreclosures! “Robo-signing” gone wild!
October 9, 2010 Leave a comment
Bank of America has decided on its own to freeze foreclosures in all 50 states. This will probably be only a temporary freeze but it’s good news if you currently have a pending foreclosure. If B of A has your loan then you should get some delay in the processing of your foreclosure from the current freeze. B of A has said that it will take weeks to check their books so presumably you will get weeks more to stay in your home.
PNC Financial, JPMorgan, GMAC, and Litton loan servicing have halted foreclosures in 23 states. These 23 states are the ones where foreclosures require a court action. In California a foreclosure can take place without a court action so for lenders other than Bank of America it seems that California will not be affected for now.
This self-imposed freeze comes when the feds are opening an investigation into bank foreclosure policies. There is a growing public demand across the country for a halting of all foreclosures.
Bank of America has apparently instituted this freeze because of irregularities in their preparation of the foreclosure documents. There are allegations of “robo-signing” which is when 100s or even 1000s of foreclosure documents are signed by bank employees without the documents being reviewed at all.
“Robo-signing” sounds ominous and it is possible that this could blow up into something larger that could affect all foreclosures. If banks are just signing documents in bulk without any review then that could have serious implications. They are required to read and review these documents. It is possible that they don’t have the time to do so with the volume of foreclosures that are occurring.
In my experience this will not fly though. Banks cannot get away with having employees sign something that states that they have reviewed documents which they have not. If some judge gets ahold of this he will demand that banks read and review these documents and maybe a moratorium will be put on foreclosures until the banks can hire the staff to do the required reviews.
This could be good news for people in foreclosure as any delay will mean more time in their houses. Stay tuned for further developments…….