BofA Suspends Foreclosures; States Look at JPMorgan

Amid growing public anger over U.S. home seizures, Bank of America has suspended some of its foreclosures and JPMorgan Chase has come under investigation in California and Connecticut.

Bank of America said on Friday it is delaying foreclosures in 23 states to review whether it has been conducting them properly. Two other big lenders—JPMorgan

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[JPM  Loading...      ()   ] and Ally Financial's GMAC Mortgage—have already suspended foreclosures.

Also, a Maine state court judge reprimanded GMAC Mortgage for how it repossesses homes. The judge concluded that GMAC submitted a company official's affidavit to support a foreclosure "in bad faith."

Companies are scrambling to defend and where needed improve their foreclosure procedures in the face of anger among homeowners and regulators.

The issue came to the forefront last month when GMAC revealed that officials had signed thousands of affidavits supporting such proceedings without knowing their contents.

Banks are expected to take over a record 1.2 million homes this year, up from about 1 million last year and just 100,000 as recently as 2005, real estate data company RealtyTrac Inc said on Thursday.

Bank of America

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[BAC  Loading...      ()   ] will halt foreclosures in the 23 states where court approval is needed and amend affidavits "to be certain affidavits have followed the correct procedures," Rick Simon, a spokesman for the largest U.S. bank, said in a statement.

It was not immediately clear how many proceedings would be affected by Bank of America's decision, and Simon did not respond to emailed questions about the number of affected foreclosures.

The statement followed an Associated Press report that a Bank of America official admitted in a Massachusetts bankruptcy case that she signed 7,000 to 8,000 foreclosure documents a month and "typically" did not read them "because of the volume."

Last month, GMAC halted evictions in the 23 states, including Florida and New York. JPMorgan, meanwhile, has halted some 56,000 foreclosure proceedings in the 23 states.

Citigroup has no plans to suspend foreclosures, a person familiar with the matter said on Friday. The bank said this week that it reviews its foreclosure document-handling process on an ongoing basis.

Wells Fargo's policies "satisfy us that the affidavits we sign are accurate," spokesman Jason Menke said in an emailed statement on Friday. "We will stand by our affidavits and, if we find an error, we will take the appropriate corrective action."

On Friday, Milwaukee-based Marshall & Ilsley

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[MI  Loading...      ()   ] extended a 2008 foreclosure moratorium through year end.

Fannie Mae, which provides much credit in the housing market despite being in a conservatorship after its 2008 near-failure, said it will tighten oversight of servicers to ensure they follow the rules.

Investigators in at least six states are examining foreclosures by GMAC, JPMorgan or both.