DENVER DAILY NEWS
U.S. Sen. Mark Udall on Friday welcomed Bank of America’s decision to halt foreclosures.
The largest U.S. mortgage servicer is the first U.S. bank to institute a nationwide freeze on foreclosures, while it conducts a review of its procedures.
Disclosures that some big U.S. mortgage processors filed false affidavits in thousands of foreclosure cases are drawing fresh scrutiny to the industry.
The U.S. Senate Banking Committee announced on Friday it would hold a Nov. 16 hearing into allegations of improper and fraudulent mortgage servicing and foreclosure processing.
Udall, D-Colo., is urging other banks to follow Bank of America’s lead.
“Bank of America was right to halt all foreclosures while it evaluates its filings, and I urge other banks to take responsible steps to ensure their foreclosure proceedings are based on properly prepared documents,” Udall said in a statement. “We need to get to the bottom of this issue before any more consumers suffer from unfair and possibly illegal practices.”
Banks are expected to take over a record 1.2 million homes this year, up from about 1 million last year, according to real estate data company RealtyTrac Inc.
While homeowners may cheer efforts to get tough with banks, some experts say a blanket halt to foreclosures could further hobble the economy, preventing banks from resolving bad loans and storing up an inventory of homes still likely to face foreclosure.
An industry-wide foreclosure halt would further depress future home prices, as a flood of pent-up foreclosures would re-enter the market at roughly the same time, say critics of the push.
Ally Financial’s GMAC Mortgage and JPMorgan Chase and Co also said last week they were suspending foreclosures in the 23 states requiring judicial foreclosure proceedings.
Wells Fargo, which has a large presence in Colorado, said it is “confident” in its foreclosure paperwork, and Citigroup is also resisting calls for a foreclosure moratorium.
Mortgage industry critics contend banks used “robo-signers,” or people who signed hundreds of foreclosure documents daily without reviewing them, and are unfairly pushing residents out of their homes.
Udall called such allegations “extremely troubling.”
“Homeowners on the brink of foreclosure deserve the assurance that their cases are being reviewed thoroughly, and that they aren’t losing their homes based on forged documents and faked signatures,” he said.