Bank of America may be trying to bring down the curtain on the foreclosure furor, but there were numerous indications Tuesday that the problems would not move off-stage so quickly.
A day after the bank said it would once again pursue defaulting borrowers in the 23 states where foreclosures were overseen by the courts, judges in Florida said they were expecting even more challenges from defaulting homeowners.
The White House is convening a meeting of regulators and administration officials on Wednesday to review federal investigations into the foreclosure crisis, while state law enforcement officials emphasized their inquiry into flawed foreclosures was continuing.
“There has been an attempt by some of the major servicers to indicate there are no problems,” said Patrick Madigan, an assistant attorney general in Iowa. “We’re not at the end of this process. We’re at the beginning.”
All 50 state attorneys general have joined in an investigation into lenders’ foreclosure processes, which in at least some cases appear to have been so sloppy that legal requirements went by the wayside.
The lenders maintain the errors involved mere technicalities, while lawyers for defaulting homeowners say they are symptomatic of a foreclosure system out of control.
The Obama administration, which declined last week to push for a national freeze on foreclosures, emphasized Tuesday that it was committed to holding accountable any bank that had violated the law.
Robert Gibbs, the White House press secretary, said that the administration was “strongly supporting the investigation by the state attorneys general” while noting that the Federal Housing Administration and Financial Fraud Enforcement Task Force have undertaken their own investigation.
Federal regulators have been looking into loan servicing problems for some months before the recent freezes by the big lenders.
The meeting at the White House on Wednesday, which will be attended by the housing and urban development secretary, Shaun Donovan, among others, will focus in part on concerns about the foreclosure crisis’s effect on the housing market and the larger economy.
In remarks at a quarterly news briefing Tuesday, William C. Dudley, president of the Federal Reserve Bank of New York, said the Fed was “seeking to establish the facts” in conjunction with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.
“We want to ensure that the housing finance business is supported by robust back office operations,” he said. He gave no timetable for when such a review might be completed.
Whatever the outcome of the various investigations, the era when the vast majority of foreclosures were unopposed and easily granted may be waning.
Some judges in Florida, the state whose courtrooms are the most overwhelmed by foreclosures, said they were likely to scrutinize the papers submitted by the big lenders with extra care.
“If we get information that there was a problem with a prior affidavit, maybe we look more carefully at the next one,” said Peter D. Blanc, chief judge of the 15th Judicial Circuit in West Palm Beach, Fla.
Thomas McGrady, chief judge of the Sixth Judicial Circuit in Clearwater, said it was still an open question for him and other judges whether they would accept amended documents from Bank of America or force the lender to refile its cases.
“All of the courts are struggling with this,” Mr. McGrady said.
The investigation by the state attorneys general is so new — it was formed last week — that its scope is still being settled.
Behind the question of improper foreclosure documentation lies a more important issue of whether lenders even have legal standing to foreclose because they lack the original mortgage note as required by law.
“The problems are not over, but their extent remains to be seen,” said Mr. Madigan, the Iowa assistant attorney general.
Bank of America , the country’s largest lender, announced it was unfreezing foreclosures in the 23 states less than three weeks after it froze them. A process that many expected to take months was completed in days.
In its statement, the bank said that it had “reviewed our process” and found it satisfactory enough to file new affidavits in 102,000 pending cases starting next week. Documents in those cases were presumably improperly done before.
A bank spokesman declined Tuesday to explain more fully the lender’s review process.
GMAC Mortgage , another large lender that had announced a freeze, also said it was refiling cases.
“We have more training, more people, a more robust policy now,” Gina Proia, a spokeswoman said.
Four years ago, in a case that foreshadowed the current uproar, a Florida court censured GMAC for false testimony. An employee said in a deposition that she had neither reviewed the record of the mortgage in the case nor known how it was created, which contradicted her sworn affidavit.
GMAC promised at the time to clean up its procedures, reminding employees not to sign court pleadings unless they had independently reviewed and checked the facts.
Despite GMAC and Bank of America’s proclamations that everything is now being done by the book, some legal and financial experts are disbelieving.
“The banks have dragged their feet and taken forever to do loan modifications, yet within less than two weeks they have managed to review hundreds of thousands of foreclosure cases,” said Adam J. Levitin, an associate professor of law at the Georgetown University Law Center.
“It is simply not credible.” Mr. Levitin is convinced that the lenders will suffer for what he sees as their attempt to put themselves above the rules.
“The genie is out of the bottle,” he said.
While most cases in Florida are still unopposed, the judges there are already starting to see an increase in defendants with counsel, even if they are simply acting as their own lawyer.
“The largest impact has been from the publicity,” said Lee E. Haworth, chief justice of the 12th Judicial Circuit in Sarasota. ”A lot more borrowers are coming forward to oppose summary judgment. More hearings are going to be contested.”