Bank of America expanded its halt in 23 states to all 50, announcing it will stop sales of foreclosed properties starting tomorrow, blocking a major step in the foreclosure process.
BoA has buckled under increased pressure over malpractice regarding foreclosure documents in "robo signer" abuse.
Reports of foreclosure processors approving documents without properly reviewing them and bank agents changing locks on the doors of houses that aren't even in foreclosure -- while the residents are inside -- pile ambiguity and scandal on the foreclosure system. HuffPo
Only 25% of eligible real estate in this country has made its way through the massive foreclosure process. Abuses in this process could have a hugely negative impact on the economy.
Rep. Alan Grayson (D-FL) has been warning about the economic danger posed by foreclosure fraud, especially for the state of Florida.
Laws governing who actually owns a foreclosed home are becoming so suspect a new buzzword is emerging: blighted titles. Even the tepid rebound of Florida's economy may face crippling delays in resolving hundreds of thousands of foreclosures in the Sunshine State.
What's wrong? The accuracy and truthfulness of an immense flood of legal documents and affidavits some lenders and their hired lawyers use to foreclose on homes have come under such critical attack that some major banks are suspending their court cases pending internal reviews.
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Sarasota lawyer Richard Kessler conducted a study that found errors in about 75 percent of court filings tied to home repossessions. "Defective documentation has created millions of blighted titles that will plague the nation for the next decade," Tampa Bay News
One result of foreclosure abuse is that
Title insurance companies may be scared away from offering "clear title" guarantees on foreclosed homes. That would throw into doubt who actually owns many thousands of houses — those going into foreclosure and those purchased out of foreclosure — all across the state.
And the nation.
What bankers and processors are doing to abuse the system now is nothing short of foreclosure churning.
Foreclosure Abuse:
One JP Morgan banker had signed more than 1000 foreclosure documents a month without reading the files.
GMAC Mortgage, the country's fourth largest home lender, said it was suspending an undisclosed number of foreclosures to give it time to take a closer look at its own procedures.
Attorney General of Massachusetts, Martha Coakley has opened an investigation into BoA.
"We are concerned about revelations that Bank of America and other major lenders have failed to properly review foreclosure documentation,’’ Coakley said in a statement. "In light of these revelations, we are asking Bank of America and other major creditors to cease foreclosure proceedings for Massachusetts homeowners until they can demonstrate that they have complied with Massachusetts law.’’
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There were 2,713 foreclosure petitions in Massachusetts in August, a 13.23 percent increase from August 2009.
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Bank of America spokesman Dan Frahm told the AP that the bank could not estimate the number of homeowners’ cases that could be affected. Boston.com
The specter of having to do so many foreclosures over again in order to secure clear title will not only choke the economy but it will also clog the courts.
One wishes it would strangle the bankers guilty of foreclosure abuse.