Bank of America wants Closure on ForeclosuresBank of America is looking for a resolution to the scandal that has halted their foreclosure practices for nearly a month. When lawyers attempting to file grievances on the behalf of homeowners discovered that BoA was skirting paperwork to get the process done faster, the alarm was raised and BoA was forced to suspend their foreclosure practices until answers could be found.
In response to BoA’s surprisingly shoddy behavior the Federal Reserve and all 50 State attorney generals embarked on a probe to decide if disciplinary measures are warranted.
Apparently feeling the pressure, BoA CEO Brian Moynihan has asked for a quick settlement to the foreclosure crisis probe. He also believes that some of the problem lies in an inefficient foreclosure system, claiming that lawmakers need to streamline the process.
In late October BoA went on to re-file over 100,000 foreclosure affidavits in the 23 states where repossession must be agreed to by a state judge. The moratorium remains in the other 27 states.
The possibility of BoA being forced to buy back thousands of defaulted homes has their investors watching the situation closely. In fact, due to the process of securitizing mortgages, it is the investors who own the
mortgage loan to these defaulted homes.
BoA announced that investors own over $750 billion in mortgage loans and that they can not yet predict how much they will be required to buy back. Discussions are ongoing with Fannie Mae and Freddie Mac over how much will be repurchased.
Either way, bad news is surely on the way for BoA and the other banks involved. If the probe shows that fears were over-blown then they will still be on the hook for billions of dollars in loses. Worst case scenario the probe shows that loan services are unqualified to conduct a lawful foreclosure because they may be unable to prove that their bank actually owns that mortgage loans. Ironically the
securitization process that was put in place to protect banks may end up being the downfall of the system, causing a reshuffling of procedures that will slow down the process and ultimately cost financial institutions even more money.