Friday, October 8, 2010

WSJ: Bank of America Stops Foreclosures in All States

Wall Street Journal is reporting Bank of America is halting foreclosures in all states, up from 23 states.  This is a potential game changer.  The mortgage market is basically controlled by "the big 3" JP Morgan, Bank of America, and Wells Fargo after the mass of consolidations and BAC's purchase of Countrywide.  JPM was in on the "23 state" halt as well, so political pressure will rise on them to join BAC in all 50.  No idea why Wells Fargo is not involved - maybe they did not do the robocop fast track foreclosure review.

PNC Financial, a regional bank just below the big behemoths also just announced a halt in the original 23 states.

I am not kidding when I say this is going to be a boon to consumer spending if the moratorium is long lasting.  I see multiple Attorney General's in the 27 states not included saying they want halts in their states as well.  Due to the political season I can see all 50 states being halted through elections at minimum.  If you are pandering for votes, a call for a national moratorium is "risk free" populism.  Perhaps this is a reason the market is spiking (as if it needs a reason)

Bank of America is placing a moratorium on all foreclosure proceedings and sales across the U.S. amid political pressure on U.S. banks to examine foreclosure-documentation problems.

The nation's largest bank by assets is the first financial institution to stop all foreclosure actions amid revelations that the banking industry had used "robo-signers," people who sign hundreds of documents a day without reviewing their contents, when foreclosing on homes. Bank of America, J.P. Morgan Chase, and Ally Financial Inc. last week postponed foreclosures in 23 states where a court's approval is required to foreclosure on a home.

The decision by Bank of America to extend its postponement to all 50 states takes effect Saturday. The bank doesn't intend to lift the moratorium until its assessment of all documentation is complete, a spokesman said.


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