Bank of America is delaying foreclosures in 23 US states as it examines whether it rushed the foreclosure process for thousands of homeowners without reading the documents.
The move adds the nation's largest bank to a growing list of mortgage companies whose employees signed documents in foreclosure cases without verifying the information in them.
Bank of America isn't able to estimate how many homeowners' cases will be affected, Dan Frahm, a spokesman for the Charlotte, North Carolina-based bank, said yesterday. He said the bank plans to resubmit corrected documents within several weeks.
Two other companies, Ally Financial Inc's GMAC Mortgage unit and JPMorgan Chase, have halted tens of thousands of foreclosure cases after similar problems became public.
The document problems could cause thousands of homeowners to contest foreclosures that are in the works or have been completed.
If the problems turn up at other lenders, a foreclosure crisis that is already likely to drag on for several more years could persist even longer. Analysts caution that most homeowners facing foreclosure are still likely to lose their homes.
State attorneys general, who enforce foreclosure laws, are stepping up pressure on the industry.
Connecticut Attorney General Richard Blumenthal yesterday asked a state court to freeze all home foreclosures for 60 days. Doing so "should stop a foreclosure steamroller based on defective documents," he said.
