Attorney Generals Stall Foreclosures
The US economy is spiraling downwards. Unemployment is at its peak. As people lose jobs, even those with excellent credit scores are faltering on mortgage payments. Hence, foreclosures are at their peak.
The Federal Government had come up with a program under which loans of homeowners are being modified, first on an experimental basis of three months and then permanently. It was thought that the program would address the needs of four million homeowners but the numbers have fallen far below the target.
Now many attorneys of states have sent notices that foreclosures be stalled because the lenders have not verified documents properly. The paperwork has been shoddy. So it can be said that the crisis has entered another phase. Already three major lenders have halted foreclosures in almost 24 states. Foreclosure sales have been halted nationwide.
The situation has raised many questions in the minds of homeowners. The first is the reason behind stalling of foreclosures. It may be pointed out that banks are reviewing the allegation. While they are doing it, they are putting a freeze on foreclosures. For instance, Ally Financial, stopped foreclosures while admitting that many of the documents have not been signed properly by the reviewer.
Bank of America and JPMorgan Chase have also stalled foreclosures saying that they are reviewing their paperwork.
It is not known however, how many loans are affected. While Chase put the figure at 56,000 loans, Ally and Bank of America have not given any. Many foreclosures are in a state of limbo. The number of foreclosures could increase if more banks decide to freeze foreclosures. Attorneys General and politicians are asking FIs to review the situation. At present, five million mortgages are delinquent.
Chase, Ally, BofA have stopped sales in 23 states. It has come to light that paperwork was shoddy here. Even bank officials admitted that they had not verified documents properly. They did not review the information properly.
BofA said that it was putting a stop to all sales of foreclosed properties. However, it will not stop the sales in 27 regions. The chief executive of BofA, Brian Moynihan, said that it will take sometime for the review.
Experts said that in most cases people will not lose homes. However, the situation will not improve till the employment situation improves. As of now, most do not have jobs and subsequently they cannot make mortgage payments.
