Major US banks are suspending foreclosures as they sort out a problem with affidavits that were improperly signed. Although regulators are putting pressure on banks to protect affected consumers, the delays could end up hurting the housing recovery. See the following article from HousingWire for more on this.
America’s largest servicer, Bank of America (BAC: 13.30 +1.51%), has suspended foreclosures cases in 23 states in order to amend any faulty affidavits, Richard Simon, a spokesman for the country’s largest lender told HousingWire.
It is the third bank to officially suspend foreclosures and admit to signing affidavits without a knowledge of the documents or a notary present. The personnel who signed these documents quickly are now referred to as “robo-signers.” Ally Financial, formerly GMAC Mortgage and JPMorgan Chase (JPM: 38.81 +1.97%) are believed to have already suspended foreclosures for similar reasons.
“We have been assessing our existing processes. To be certain affidavits have followed the correct procedures, Bank of America will delay the process in order to amend all affidavits in foreclosure cases that have not yet gone to judgment in the 23 states where courts have jurisdiction over foreclosures,” Simon said.
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Regulators and state attorneys general offices have demanded meetings, reviews and even moratoriums on foreclosures from both Ally Financial and JPMorgan Chase. The same reaction can be expected for Bank of America.
In 2009, Bank of America held $2.1 billion worth of mortgages in its servicing portfolios. That’s more than the amount held by JPMorgan Chase and Ally Financial combined.
An executive at a third-party mortgage company told HousingWire that the threat of these faulty affidavits would go beyond foreclosures and even the disqualification of the homebuyer tax credit for some, according to a HousingWire report earlier. The entire recovery in the housing market could be at risk. The unnamed source requested not to be identified because of the sensitivity of the issue.
“The entire economy will be hurt by these extensions. I can understand that they appear to be in the best interest of the consumer, but we continue to delay the impact of the financial restabilizing or the finanicial rebalancing of our economy. We’re putting borrowers in homes without making mortgage payments, and at the end of the day the taxpayers are the ones picking up the tabs for this stuff,” the executive said.
Neither Wells Fargo (WFC: 25.56 +1.77%) or Citigroup (C: 4.09 +4.60%) have confirmed a foreclosure suspension as they review their documents.
This article has been republished from HousingWire. You can also view this article at HousingWire, a mortgage and real estate news site.