HEAVY LOAD: A record number of defaults has put added pressure on an already overloaded processing system.
By George White, RE/MAX Times Online Managing Editor
Developments over the past three weeks – most notably the issue of “robo-signers” and concerns about legal standing – have pushed the processing of foreclosures into the spotlight, even prompting a debate on the need for a national moratorium and/or investigation.
As of now, Bank of America has suspended its foreclosure actions in all 50 states, while Ally Financial (GMAC Mortgage), and JPMorgan Chase have halted theirs in the 23 states in which courts are involved in the process. Wells Fargo is not planning to change its approach.
Calls for federal investigations and/or freezes have come from several attorneys general and a variety of legislators.
The Senate Banking Committee will hold a hearing Nov. 16 to examine allegations of improper or fraudulent mortgage servicing and foreclosure processing.
For its part, the Obama administration has indicated that it doesn’t support the idea of a national moratorium.
“I’m not sure about a national moratorium because there are, in fact, valid foreclosures that probably should go forward and where the documentation and paperwork is proper,” White House senior advisor David Axelrod said during Sunday’s “Face the Nation” show on CBS.
On Wednesday, FHA Commissioner David Stevens reiterated that position in an e-mail to the Washington Post: “We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile housing market.”
A brief timeline of recent events:
9/20 Ally’s GMAC Mortgage Halts Home Evictions in 23 States
9/27 State AG offices launching investigations into Ally Financial foreclosures
9/29 JPMorgan Chase warns attorneys of possible foreclosure robo-signers
9/30 OCC orders seven large servicers to review foreclosures
10/5 Old Republic Will No Longer Insure JPMorgan and GMAC REOs
10/6 Ohio Attorney General Files Fraud Suit Against GMAC Mortgage
10/7 Government Oversight Chairman seeks nationwide foreclosure moratorium
10/9 Bank of America halts foreclosure sales in all 50 states
10/13 49 state AGs announce broader investigation into mortgage servicing industry
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At this time, I personally don’t believe that all foreclosure sales nationwide will be halted. Hopefully calmer minds will prevail and only cases that actually have improper paperwork will be suspended. Unfortunately, Fannie Mae has yet to make a public statement regarding their corporate position on the bad loans serviced by Bank of America that Fannie Mae now owns. With 18 pending transactions several of which we have put under contract this week, there appears to be no slow down yet. This is probably because Tennessee is not a state that requires a judicial review of any pending foreclosure before it can become final. We will keep you posted if anything changes here in Gatlinburg!