Bank of America halts foreclosure sales

Perhaps staying ahead of Washington intervention, the nation's largest bank has stopped foreclosure sales in all 50 states as it reviews the way it has been handling its paperwork. The action is in response to revelations that mortgage company employees or their lawyers signed documents in foreclosure cases without verifying the information in them. Up until now, B of A and other major lenders said they would only stop sales in the 23 states where foreclosures must be approved by a judge (California not among them). Some context from Reuters Breaking Views:

Big banks had been looking forward to some time out of the harsh glare of Washington's spotlight. But as fast as a mortgage lender "robo-signing" its way through a pile of foreclosure orders, politicians are calling for hearings into charges that some financial institutions played fast and loose with the procedures for reclaiming homes. It's a bipartisan effort ahead of the midterm elections. The lead Republican on the Senate Banking Committee is urging regulators and lawmakers to examine mortgage practices at BofA, JPMorgan and Ally Financial, formerly known as GMAC. The president, meanwhile, said "no thanks" to legislation that could have made it harder for homeowners to challenge dodgy foreclosures.

But is robo-signing that big a deal? The banks say that while their methods may have been questionable, foreclosure papers were adequately examined so that nobody got the bum's rush from their home. Consumer groups say that robo-signing is evidence that the banks are unable or unwilling to properly handle the foreclosure flood.