Looks like the depths of the foreclosure fraud is truly coming to light as Bank of America, the nation’s largest bank, announced on Friday that it was putting on hold foreclosures in 23 states because of concerns that the bank used fraudulent affidavits to support kicking homeowners out of their home.
While so far the crisis has focused on group in particular, Ally Finanical, it would appear that the entire industry relied on the practice of “robo-signing”–that is, executing sworn statements detailing the circumstances warranting foreclosure despite not having any personal knowledge of the facts of the particular case. One Bank of America executive said in a February deposition in Massachusetts that she signed as many as 8,000 foreclosure documents a month without reviewing them. The statements were taken by lawyers representing homeowners contesting the seizure of their homes.
States are finally responding, realizing that they may be faced with thousands of homeowners using these falsified documents as a means to try and reclaim their homes. The legal ownership of countless of properties, purchased during the foreclosure process could now be called into question nationwide.
To respond, Connecticut Attorney General Richard Blumenthal (D) announced a 60-day moratorium on foreclosures by all banks is the state. It’s the first state to take such a measure, but one others should follow for the sake of its citizens.
California’s moratorium on foreclosures issued by Ally Financial was extended to include those by J.P. Morgan Chase. California Attorney General Jerry Brown (D) ordered J.P. Morgan to prove it was following the law before it resumes foreclosures in the state.
Given the Bank of America announcement, it is unlikely lenders will be able to verify that their process took place free of fraud. Quite simply, to foreclose on the number of homes as these lenders have would take hundreds of thousands of more dollars in terms of manpower to review files and verify facts. The banks were not interested in verifying facts. They were interested in salvaging an investment, consequences be damned.
photo courtesy of respres via Flickr