BREAKING NEWS FROM CNBC's DIANA OLICK: NEW ROBO SIGNING SCANDAL DEVELOPMENTS
When: Today, January 25, 2011
Where: CNBC's "Squawk on the Street"
Following is the unofficial transcript of breaking news from CNBC's Diana Olick. All references must be sourced to CNBC.
DIANA OLICK: WELCOME BACK TO SQUAWK ON THE STREET, I'M DIANA OLICK WITH BREAKING NEWS. THE ROBO SIGNING SCANDAL ISN'T OVER. IN FACT WE MAY BE HITTING PART TWO. AS YOU KNOW ABOUT HALF OF U.S. STATES HAVE A JUDICIAL FORECLOSURE PROCESS THAT GROUND TO A HALT WHEN SHORTCUTS IN THE FORECLOSURE PROCESS CALLED ROBO SIGNING WERE DISCOVERED. THE BIG BANKS THEN HALTED FORECLOSURE SALES NATION WIDE. NOW MORE BAD NEWS FOR THE OTHER NON-JUDICIAL STATES. BANK OF AMERICA TELLS CNBC THAT IN ADDITION TO STOPPING FORECLOSURE SALES BACK IN OCTOBER THEY ALSO STOPPED THE NOTICES OF DEFAULT IN NON-JUDICIAL STATES WHICH IS CRUCIAL BECAUSE THOSE STATES INCLUDE CALIFORNIA, NEVADA, ARIZONA- THREE OF THE TOP FOUR WORST IN FORECLOSURES. NOTICES OF DEFAULT ARE THE FIRST ALERT SENT TO BORROWS AND FILED IN COUNTY RECORDS THAT THE FORECLOSURE PROCESS HAS STARTED. NOW SOURCES ALERTED US TO A HUGE DROP OFF IN CALIFORNIAN NOTICES OF DEFAULT SINCE OCTOBER. A DROP THAT COULDN'T BE EXPLAINED BY AN IMPROVING ECONOMY OR BETTER MODIFICATIONS. NODs IN CALIFORNIA ARE DOWN ALMOST 50 PERCENT THROUGH JANUARY ACCORDING TO A SOURCE WE CONTACTED BANK OF AMERICA WHICH SHOWED THE BIGGEST DROP IN B OF A SAID AS PART OF THE MODIFICATION IN FORECLOSURE REVIEW IN LAST OCTOBER "WE DID CONDUCT A REVIEW OF THE NOTICE OF DEFAULT PROCESS. AS A RESULT WE STOPPED THE NOD PROCESS IN THE NON JUDICIAL STATES." BOFA SAYS THEY REVIEWED AND "IMPROVED THE PROCESS AND ARE RAMPING UP THE VOLUME NOW." THIS APPEARS TO BE THE NEXT SHOE TO DROP AS SEVERAL BORROWS ARE NOW FILING LAWSUITS CLAIMING ROBO SIGNING OF DEFAULT NOTICES ARE GROUNDS TO STOP FORECLOSURES MORE FUEL FOR MORE LAWSUITS AND POTENTIAL INVESTOR PUTBACKS ON AN ENTIRELY NEW FRONT. IT ALSO MEANS THAT THE DROP IN FORECLOSURE FILINGS THAT WE'VE SEEN RECENTLY ISN'T REAL AND AS ONE SOURCE PUT IT TO ME ,"DISTRESS LOAN PIPELINES ARE POISED TO GET OUT OF CONTROL BEGINNING IN Q1." NOW WE CONTACTED JP MORGAN CHASE THEY ARE STILLING BACK TO US. WELLS FARGO SAYS THEY DID NOT STOP NOTICES OF DEFAULT. FOR MORE WE'VE GOT LOTS ON THE BLOG: REALTYCHECK.CNBC.COM.
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