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Naked Capitalism Reports: Bank of America Suspends Foreclosures in All States

08 Oct

Bank of America Suspends Foreclosures in All States

from naked capitalism by Yves Smith

We have been saying for some time that the affidavit problem that has led GMAC, Bank of America, and JP Morgan to suspend foreclosures in 23 judicial states could not be limited to these states. The robo signing of affidavits was clearly done across all sorts of court actions. As we indicated, the bogus affidavits are used in all foreclosures in judicial states; they aver various things about the plaintiff’s indebtedness, including the plaintiff’s ownership of the debt that are integral to the process. Providing an improper affidavit is considered to be a fraud on the court.

But the same fraud takes place in non-judicial states whenever a foreclosure is contested (which happens routinely in bankruptcy cases). So the false affidavit situation affects all states, just in much bigger numbers in judicial states.

Even more important, as we have stressed, the affidavit abuses are mere symptoms of much deeper problems with the mortgage securitizations. Why, pray tell, are law firms and servicers engaging in false representations and widespread document forgeries? It is because, as we have stressed, they made a botch of getting the notes (the borrower IOU) into the trusts, and simple fixes don’t work, hence the need to create a phony document trail. The Bank of America suspension of foreclosures in all states appears to be a tacit admission that the problems are as pervasive as we have suggested.

From Bloomberg:

Bank of America Corp., the biggest U.S. lender, will halt foreclosures in all 50 U.S. states to determine whether documents used to seize homes from people had the correct data.

“We will stop foreclosure sales until our assessment has been satisfactorily completed,” the Charlotte, North Carolina- based company said today in a statement. “Our ongoing assessment shows the basis for foreclosure decisions is accurate.”

Bank of America already froze foreclosures this month in the 23 states where courts supervise home seizures. The new policy extends the moratorium to the entire nation. Banks are being pressed by state officials to halt foreclosures amid allegations that employees used unverified or false data to speed the process. Attorneys general in Ohio and Connecticut have said the practices may amount to fraud….

At least seven states are investigating claims that home lenders and loan servicers took shortcuts to speed foreclosures. Attorneys general in Ohio and Connecticut have said some of the practices used by banks to take away homes may amount to fraud. Acting Comptroller of the Currency John Walsh last week asked the nation’s seven biggest lenders to review foreclosures for defective documents, spokesman Bryan Hubbard said.

 

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