BofA to Commence Foreclosure Proceedings Despite Robo-Signing Scandal
The ongoing Mortgage robo-signing scandal just keeps getting worse every day. Just last week, Bank of America announced that they would resume the 102,000 pending foreclosures that they currently hold. The problem is that, they stated in this announcement, they did a “thorough review” of its foreclosure processes and didn’t find any fault. On Sunday, October 24, 2010, Bank of America almost retracted when they admitted that they actually did find errors in its filings but they plan to continue its filing processes for foreclosures in a “deliberate manner” as corrected and new paperwork is submitted to the Courts.
This quasi-retraction has furthered doubt that any bank, including Bank of America, will be able to clean up their acts and clean up this robo-signing mess. This robo-signing is the most pressing issue. In short, employees at JPMorgan Chase, Bank of America as well as a few other banks asserted falsely that they corroborated the facts concerning Court foreclosure filings for potentially hundreds of thousands of immediate and previous foreclosures. Another problem has arisen concerning the loss or improper transfer of crucial documents; which raises questions concerning the value of securities backed by the Mortgages and about the banks’ legal standing to foreclose.
Ultimately, only the state courts can decide whether their banks can foreclose with substitute or defective documents. Another hurdle for the state courts will be that they will have to wade through the complex process of ruling on any disputes between investors and banks over mortgage securities.
In the previous week, Bank of America allowed that they received a letter from mortgage investors, including Federal Reserve Bank of New York and Freddie Mac, with the demand that the bank needs to repurchase problem loans that were bundled into securities in excess of tens of billions of dollars.
Investors can coerce banks to repurchase loans which were inadequately processed or vetted as well as loans that didn’t meet underwriting guidelines. These repurchases will be of the utmost importance to taxpayers because the government now backs or owns a huge number of problem loans and related securities. These loans and securities are currently held by the Fed, Freddie Mac and Fannie Mae. Hence, if these loans are not repurchased, the taxpayers will take the hit.
Bank of America still contends that they do not believe they are at fault for the poor performance of the loans. Up until now, the Obama administration has focused too much energy to shore up the banks, which has increasingly become suspect over the intervening financial crisis. The White House has given the banks notice to rectify the errors in their foreclosure paperwork. It is believed by some that more needs to be done. The White House could possibly work with Congress to ensure that homeowners will first be offered timely and fair mortgage modifications before foreclosure processes be recommenced. Tougher action has been promised by Shaun Donovan, Secretary of Housing and Urban Development. Unfortunately, Donovan has not been clear with the details.
The banks seem to be mired in quicksand and some, including Bank of America, are trying to move too fast to get out and, hence, they are slipping under faster.
[...] chaos instigated by the robo-signing scandal, where loan servicers and their employees would sign thousands of foreclosure documents a day [...]