On Friday, Bank of America announced that it would suspend foreclosures in 23 states while it "amended" filed paperwork. That makes B of A the third major bank in two weeks to put its foreclosure process in limbo. Two days earlier J.P. Morgan Chase announced it would freeze foreclosures on more than 50,000 homes currently in receipt of a foreclosure filing. Last week, Ally Financial Inc. (the former GMAC Mortgage) also froze foreclosures.
- How The Foreclosure Mess Could Hurt The Housing Market
- Don't Be Driven to Foreclosure by Mortgage Fraud
- Is Your Lender Taking Advantage of You?
- Why We Need a National Freeze on Foreclosures
- Will a Foreclosure Freeze Fix the Housing Market?
- 50 States Launch Joint Probe into Foreclosures
Experts say that most of the major banks have plenty of problems with foreclosures. That comes as no surprise to the tens of thousands of CBS MoneyWatch readers who have closely followed and commented on my many "Loan Modification Hell" blog posts. If you read the comments, it's clear that these three banks are not the only ones with a problem.
Today, Ohio's Secretary of State Jennifer Brunner asked federal prosecutors to investigate foreclosure irregularities in her state. Ohio has been pushing lenders to do better. On September 17, Ohio Attorney General Richard Cordray announced that the state court had affirmed its case and legal strategy of holding loan servicers accountable in the foreclosure crisis. (Check the comments on the "Loan Modification Hell Lawsuits" post.)
So, will Chase's and Ally's foreclosure freeze ultimately fix the housing market? That's one theory put forth in today's New York Times. But, I'm not so sure. What will happen in the short run is that all of the banks will put a moratorium on the foreclosures. Law firms that have become foreclosures processing machines in places like Florida, will have a lot of extra time on their hands.
I suppose, in the best of all worlds, slowing down or freezing foreclosures might actually force lenders to take a harder look at ways they might keep folks in their homes, like doing more loan modifications. That would reduce the so-called "shadow inventory" and keep housing values from crashing again.
Again, that's the best possible scenario. I think it's too soon to tell. And, there's a lot that's going wrong with the economy right now (jobs, anyone?) which could complicate the view in your rose-colored glasses.
Right now, those who have Chase and GMAC on the top of their loans are getting a reprieve. I'll follow this over the weekend on the blog. Please leave your comments, thoughts and suggestions.
- Are You Getting Screwed By Your Lender?
- Help For Homeowners: 4 Million Homeowners Ask For Help
- Foreclosure Counseling For One Million, And Counting
- Help for Homeowners Totals $3 Billion Under New Obama Plan
- Foreclosure Process Shows Mortgage Lending Isn't The Only Problem
- What Does Main Street Know That Wall Street Doesn't?
- Real Estate Crisis Continues - Non-Residential Construction To Fall 20% by End of 2010
- Jobs, Small Businesses, Payrolls, and the Economy
- Loan Modification Hell: Join The Club
- Loan Modification Success Story - Filing a Complaint With the OCC Can Help
- Loan Modification Hell: New Solutions To Avoid Losing Your Home
Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and The Equifax Personal Finance Blog, and is Chief Content Strategist at RealtyJoin.com, a community for real estate investors.