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July 25, 2012 / Brandon Brouillette

Banks’ Quick Thaw of Foreclosure Freeze Raising Eyebrows

Earlier this month mortgage giant Bank of America announced that it would be freezing foreclosures sales nationwide amidst allegations of possible foreclosure fraud inherent in its mortgage servicing policies.  Bank of America’s action was partly in response to attorney generals from various states announcing investigations into the lender’s foreclosure process.  More layers were revealed just last week when deponent-mortgage servicers in a Florida suit against Bank of America brought by defaulting homeowners testified that it was common practice to sign loan serving documents without reading them.  Many other banks have also acknowledged employing these “robo-signers”.  In response to Bank of America’s decision to halt foreclosures, Harry Reid, the Senate Majority Leader, who had been hard on Bank of America in the past, stated “I thank Bank of America for doing the right thing.”

Now, just ten days after announcing its nationwide foreclosure freeze, Bank of America claims it has sufficiently reviewed its foreclosure process, and thus presumably corrected it, to allow the bank to restart foreclosure sales.  And Bank of America isn’t alone.  GMAC, too, claims it has cleaned up its mortgage servicing procedures, and has announced it will be refilling cases.  Understandably, consumer attorneys are skeptical.  So while Bank of America and other mortgage lenders alike will continue foreclosing on defaulting homeowners, the bright side may be that the banks’ opposition will continue to grow as word spreads of lender culpability among homeowners facing foreclosure.  Stay tuned.

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