Bank of America, Arizona's largest home mortgage lender, said Friday that it has extended a 23-state moratorium on bank owned home sales to all 50 states while bank officials review the way they process foreclosures.
BofA and other big mortgage lenders are facing mounting pressure over how they handle foreclosure-related documents, with growing attention to reports of incomplete or inaccurate documents that aren't subject to rigorous verification before bank officials sign off on them. The moratorium gives the bank time to review and address concerns about whether foreclosures have been completed properly.
Some Phoenix-area homeowners, lawyers and real-estate professionals said the Charlotte, N.C.-based Bank of America Corp.'s 60-word statement about the moratorium was confusing, vague and potentially hurtful to the battered local housing market.
"Bank of America has extended our review of foreclosure documents to all 50 states," the BofA statement said. "We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for our past foreclosure decisions is accurate. . . . Providing solutions for distressed homeowners remains our primary focus."
After BofA's announcement, U.S. Senate Majority Leader Harry Reid, D-Nev., called on major lenders to halt foreclosures nationwide. He joins a long list of homeowner advocates, lawmakers and state attorneys general who have called for greater scrutiny of the foreclosure process.
In Maricopa County, there are currently 39,042 single-family residences or condos with an active notice of trustee's sale, according to Information Market's analysis, of those, 12,198 pending foreclosures, or 31.2 percent, show Bank of America offices as the beneficiary and ReconTrust as the trustee.
Information Market determined that 4,551 of the 20,850 bank- and government-owned homes currently in its database were BofA foreclosures, which is about 22 percent.
Analysts believe that Bank of America will temporarily suspend foreclosures to prevent a backlog of bank-owned homes from accumulating. This could unintentionally help borrowers who have stopped making payments yet are still living in their homes. For many of these individuals, the payment free periods could extend even longer.
Mesa attorney James Portman Webster said he believes the moratoriums are primarily aimed at helping Bank of America and other lenders rather than homeowners
"It's going to push back foreclosure dates," Webster said. "It's going to put everything on pause temporarily." He said he has a few delinquent clients who have been living in their homes as long as three years while waiting for banks to seize their properties.
The bottom line is, another major delay for the housing market to rebound.
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