Bank of America needs weeks to untangle its foreclosure mess

On Friday, Bank of America became the first major US bank to suspend foreclosure sales in all 50 states after questions were raised about whether it and other banks had illegally seized homes without the proper documentation. In a deposition filed in a Massachusetts lawsuit, a Bank of America official said she signed as many as 8,000 foreclosure documents a month, usually without reading them, a process known as ‘‘robo-signing.’’

Bank of America’s spokesman said he could not give any details about the problems with the foreclosure process, or say when sales of foreclosed homes would resume, until after the bank finishes checking the paperwork for all pending foreclosures.

Two other major lenders, GMAC and JP Morgan Chase, have also halted foreclosures in many states, but not yet in Massachusetts or New Hampshire.

Oher banks,such as Wells Fargo & Co., have declined to halt their foreclosures.

Meanwhile, the Boston Globe received some acerbic comments on their editorial page concerning the situation:

“Former hair stylists, factory workers and Wal-Mart greeters are among the bank-designated ‘foreclosure experts’ at the heart of the current paperwork fiasco that’s wrapping the housing market in a legal stranglehold. If anyone still had confidence in major mortgage lenders’ ability to properly process foreclosures, today’s news reports ought to complete the crisis of faith.’’

“The scandal at the center of our latest mortgage mess is not the ‘robo signers’ who played fast and loose with the affidavits submitted in foreclosure cases. It is that after years of propping up the banks and the alleged reform of the financial system under the Dodd-Frank bill, we still are teetering on the same precipice upon which we found ourselves in the wake of the Lehman Bros. collapse: Enormous amounts of toxic mortgage-backed securities remain on the banks’ books at imaginary valuations while prices for the $1.3 trillion in mortgage-backed securities are crashing, inspiring ‘too big to fail’ institutions to seek special political favors.’’


By Doug Beaton

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