Bank of America announced Friday that they are expanding their moratorium on foreclosure processing to all 50 states. Last week, the country’s largest bank said that they were halting foreclosures indefinitely in the 23 states where lenders need court approval to foreclose on a property in order to double-check their work. JPMorgan Chase, GMAC Mortgage and PNC Financial have stopped foreclosures in 23 states and others are expected to follow suit.
State lawmakers and federal regulators have called on banks to take a second look at their work and processes. Several attorney generals have opened up investigations into lenders and the investigations could eventually lead to litigation.
According to The New York Times, both the chairman of the House Committee on Oversight and Government Reform, Representative Edolphus Towns of New York, and the Senate majority leader, Senator Harry Reid, praised Bank of America for what they saw as a responsible business decision and called on other banks to follow their lead.
According to The New York Times, Bank of America services 14 million loans, and more than 14 percent of those loans are past due or in foreclosure. Bank of America’s chief executive says they have not found any problems so far in the foreclosure documents, but wanted to check over their work again to make sure everything was correct and in order, which he expects to take a few weeks.
During the height of the housing crises, lenders were processing thousands of foreclosures every month, which made them unable to personally verify all details in the documents. As courts involved in foreclosures became aware of the haste in which so many foreclosures had been processed, more pressure came down on the lenders to stop foreclosures until they were sure they were being done properly.
Largest U.S. Bank Halts Foreclosures in All States (The New York Times)