Need I say more??

B o A halts foreclosures

Now Bank of America (BoA) has joined the crowd by freezing home foreclosures in 23 states as it investigates whether there were flaws in its process. "We have been assessing our existing processes," Bank of America said in a statement. "To be certain affidavits have followed the correct procedures, Bank of America will delay the process in order to amend all affidavits in foreclosure cases that have not yet gone to judgment in the 23 states where courts have jurisdiction over foreclosures." Bank of America did not have an estimate of the number of homeowners that will be affected by the delayed process. The announcement comes two days after JP Morgan Chase said it will also halt foreclosures for about 56,000 homeowners after learning that its employees may have approved foreclosures without personally reviewing loan files.

Last week, Ally Financial, previously known as GMAC, the finance arm of General Motors, said it will also pause foreclosures in the 23 states. Mortgage lender Freddie Mac said Friday that it is "deeply concerned" with the recent reports and said the alleged practices are not in compliance with its guidelines. "We expect to provide instructions to our servicers later today that are intended to ensure that their foreclosure processes are in compliance with state law and Freddie Mac's servicing requirements," the lender said in a statement. "It's essential that the industry work together to protect borrowers' rights and ensure the integrity of the foreclosure process."

JP MORGAN/CHASE

"JP Morgan Chase told CNBC on Wednesday that it will delay more than 56,000 foreclosure proceedings due to paperwork that was signed, 'without the signer personally having reviewed those files.' That came on the heels of GMAC halting foreclosures and evictions in 23 states for roughly the same reason. All this leads anybody with a heartbeat to figure that other large servicers will likely follow suit, as potential lawsuits abound. So what will that mean to the larger foreclosure crisis and the already weakening housing recovery? 'It's clear the pace of foreclosures will slow down,' says Laurie Maggiano, Policy Director in the Treasury Department's Homeownership Preservation Office. 'As of right now this is a policy and procedure issue until proven otherwise, but never underestimate mid-term electioneering,' says mortgage consultant Mark Hanson. 'If this does go to the next level (i.e. national foreclosure moratorium, fear that hundreds of thousands of foreclosures have be
en performed illegally, etc.), the unintended negative consequences on the mortgage market, MBS investors, banks' balance sheets and ultimately the housing market will be significant. '

We're already seeing threats of ratings agency downgrades on all the major servicers, not to mention the threat to housing's overall recovery. If the bulk of these cases are valid, then delaying them is only going to prolong the pain. 'Worst case is that the current foreclosure problems turn out to be industry-wide and trigger a landslide of legal challenges that lock up foreclosures resolutions for a year or more,' says Guy Cecala, publisher of Inside Mortgage Finance. That means all kinds of borrowers would sit in their homes free of charge, banks would be unable to get any return at all, and the housing market would still be facing the inevitable: 'We may then see a [foreclosure] surge at some point in the future,' notes Treasury's Maggiano. We've talked an awful lot about artificial government stimulus skewing the housing recovery as it tries to help; that's nothing compared to the potential for this latest scandal to wreak havoc on housing yet again."