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BofA halts foreclosure seizures nationwide

The bank will widen its probe of the process. California has been among the hardest-hit states.

October 09, 2010|By Alejandro Lazo and Alana Semuels, Los Angeles Times

The moratorium will also mean that fewer houses are available on the market, which could make it more difficult for buyers to find homes, said Christopher Walker, a Riverside broker.

In an open letter to Congress two financial industry groups, the Mortgage Bankers Assn. and the Financial Services Roundtable, said a national foreclosure moratorium could be detrimental to the economy.

"Calls for a blanket national moratorium on all foreclosures are a bad idea and would cause significant harm to communities at risk, the unstable housing market and the fragile economy," the letter said.

Although it will halt seizures and sales of foreclosed homes, BofA said it would continue foreclosure proceedings against homeowners who are late on their payments.

If a borrower is delinquent, the bank will still issue a notice of default and pursue efforts to modify certain mortgages, the bank said.

"Our ongoing assessment shows the basis for foreclosure decisions is accurate," BofA said in a statement posted on its website.

Politicians and consumer advocates, however, called on other lenders to follow Bank of America and stop foreclosures until the questions can be resolved.

California Atty. Gen. Jerry Brown — who said his office has held discussions with Bank of America, Ally, Chase, Wells Fargo and OneWest over their foreclosure practices — called for a statewide moratorium on home seizures until those banks could demonstrate that they were complying with state law.

"All lenders should halt foreclosures until they clear up this mess and ensure that the process is fair," Brown said. "Bank of America has taken an important step, and the other major lenders should follow its lead."

Consumer advocates said the move by BofA suggested that the problems mortgage servicers were facing with processing foreclosures were more widespread than initially thought.

"There is a serious problem with the reckless and careless way in which the banks and servicers are processing foreclosures and taking people's homes," said Kevin Stein, associate director of the California Reinvestment Coalition.

Times staff writers Tiffany Hsu, E. Scott Reckard and Walter Hamilton contributed to this report.

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