Bank of America to resume foreclosures

Bank of America to resume foreclosures

Bank of America announced on Monday that it would proceed with the foreclosure of at least 100,000 homes across 23 states starting next week, citing legal rights to do so amid allegations of document fraud.

Observers say that the move of the country’s biggest bank may soon be followed by other lenders which would mean further weakening of the housing sector, since foreclosure standards between banks are practically identical.

“We’ll be back to square one by the end of the year,” said banking analyst Nancy Bush of NAB Research.

If the plan of Bank of America pushes through, the cost of the foreclosure document fiasco would probably be less than what some analysts predicted. Bank shares dropped last week following the announcement of JPMorgan Chase & Co. that it would spend $1.3 billion during the third quarter in legal dues related to the document mess.

Bank of America’s shares rose 3 percent or 36 cents and closed at $12.34 following the announcement.

The bank said it is yet to act on foreclosures for 27 states pending a review.

Bank of America stopped processing foreclosures two weeks ago after reports surfaced that employees did not prepare foreclosure documents properly and signed off many documents without thoroughly reviewing them.

“The basis for our foreclosure decisions is accurate,” Bank of America spokesman Dan Frahm said in a statement about the lender’s new strategy.

Ally Financial, PNC Financial Services Inc., GMAC Mortgage, and JPMorgan also froze thousands of foreclosures after the filing irregularities were reported.

Posted by James Fried on Tuesday October 19 2010, 6:28 AM EST. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0