Bank of America Corp. is placing a moratorium on all foreclosure proceedings and sales across the U.S. due to mounting political pressure on large 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 due to 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 & Co. and Ally Financial Inc. last week postponed foreclosures in 23 states where a court’s approval is required to foreclose 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.
Bank of America, GMAC, and JP Morgan Chase had already suspended foreclosures in the 23 states where a judge’s approval was needed.
The fallout has been fast and furious. As one Realtor told us this morning, “It basically shut us down. It will cause a disaster in the housing market if not resolved soon.”