WASHINGTON (AP) — Bank of America on Friday halted foreclosures on homes across the country so it could review paperwork in tens of thousands of cases for flaws, expanding a crisis at a perilous time for the housing market.
The move came as PNC Financial Services became the fourth major bank to announce that it would stop foreclosures in at least some states. It added to growing concerns that mortgage lenders have been evicting homeowners despite flawed court papers.
Bank of America, the largest U.S. bank, had said a week earlier it would stop foreclosures in the 23 states where the process must be approved by a judge. Ally Financial’s GMAC Mortgage unit and JPMorgan Chase had announced similar plans.
The bank said it had not found any widespread problems in the foreclosure process, but “We’ll go back and check our work one more time,” CEO Brian Moynihan told the National Press Club in Washington.
A Bank of America spokesman acknowledged that the bank acted in response to pressure from state attorneys general and other public officials inquiring about the accuracy of foreclosure documents.
“We feel the need to address that and demonstrate that our process is accurate,” said the spokesman, Dan Frahm.
A document obtained last week by The Associated Press showed a Bank of America official acknowledging in a legal proceeding that she signed thousands of foreclosure documents a month and typically did not read them. The official, Renee Hertzler, said in a February deposition that she signed up to 8,000 such documents a month.
The bank said it would take a few weeks to tackle the problem. It did not say how many foreclosure cases would be affected but estimated the figure would be in the tens of thousands.
Senate Majority Leader Harry Reid, whose state of Nevada has been among the hardest hit by foreclosures since the recession began, and who is in a difficult fight for re-election, applauded the bank “for doing the right thing by suspending actions on foreclosures while this investigation runs its course.”
Sen. Christopher Dodd, D-Conn, the chairman of the Senate Banking Committee, said he would hold a hearing on the issue next month.
The decision should help Bank of America manage its image during a dicey time for the industry, said Michael Robinson, a crisis communications expert with Levick Strategic Communications. Banks have been the target of widespread public anger since the financial meltdown.”All the other banks are going to end up there anyway, either because they’re going to be forced, or by political pressure,” he said. “Americans, otherwise known as customers and voters, aren’t over the economic crisis. You don’t want to become a political pinata.”