Bank of America (BAC) plans to halt foreclosure sales across the nation, as it reviews whether it handled its foreclosure documentation and procedures properly, the banking giant said Friday.
BofA will continue the foreclosure process on delinquent borrowers, but will stop short of foreclosure judgments and sales scheduled for Saturday and beyond.
The move by BofA extends the mortgage foreclosure moratorium it had initiated in 23 states earlier this month, after it came to light that employees were signing off on foreclosure documents without verifying all the information contained in the documents. Other financial institutions, including Ally Financial's GMAC Mortgage and JPMorgan Chase (JPM), also issued a temporary halt earlier this month in the 23 states that require court approval to foreclose on properties.
In expanding its moratorium nationwide, BofA's spokesman Dan Frahm stated:
Bank of America has extended our review of foreclosure documents to all fifty states. We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for our past foreclosure decisions is accurate. We continue to serve the interests of our customers, investors and communities. Providing solutions for distressed homeowners remains our primary focus.
The decision to expand the moratorium follows a call on Thursday by Rep. Edolphus Towns (D-New York), chairman of the House oversight committee, for the institutions to expand their moratoriums nationwide. Apparently, BofA was listening to Edolphus and a number of other state and federal officials, but its unclear whether GMAC and JPMorgan Chase will follow.
JPMorgan and GMAC declined to comment on whether they will take similar action.
Earlier this week, GMAC issued a statement about its foreclosure procedures after the Ohio Attorney General filed a lawsuit against the lender alleging it used fraudulent affidavits and documents during court foreclosure proceedings. In its statement, GMAC said it believed there was "nothing fraudulent or deceitful about its foreclosure practices." It noted that if any procedural errors were made while completing certain documents, the lender immediately took steps to fix them.
Congress is also weighing in the issue. Sen. Christopher Dodd (D-Conn), chairman of the Senate banking committee, announced Friday the committee will hold a hearing on Nov. 16 to investigate the mortgage servicing and foreclosure processing controversy.
"American families should not have to worry about losing their homes to sloppy bureaucratic mismanagement or fraud," Dodd said in a statement. "I am deeply troubled by recent revelations and allegations of practices by some of the nation's largest lenders. Regulators at the federal, state, and local levels have a responsibility to uphold the law and protect consumers from unfair foreclosure, and lenders have a duty to not cut corners around the law."
Also See: PNC Halts Foreclosures in 23 States