By now you may have heard that Bank of America has suspended foreclosure sales in all 50 states. The start date is October 9th, so more facts may be forthcoming, but so far this is all we know:
“Bank of America has extended our review of foreclosure documents to all fifty states. We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for our past foreclosure decisions is accurate. We continue to serve the interests of our customers, investors and communities. Providing solutions for distressed homeowners remains our primary focus.”
Nobody is exactly clear yet on whether they are including trustee sales, REO sales, or both.
The local BofA reps haven’t heard anything definitive, and we probably won’t know anything else until we get there. But so far the REO sales are still happening (I closed one today, the house in Escondido after nearly a year). The Equator website that BofA uses to process REO sales has not had any memos, updates or suspended any action.
What will it mean for the market?
Other lenders will feel pressure to join in, and over the next few weeks there will be more uncertainty about when the “foreclosure crisis” will commence, let alone end.
BofA hasn’t been lighting up the scoreboard around here lately – they only foreclosed on 6 houses and 4 condos this week, out of the 301 on their NOT/auction list for NSD County Coastal (3%).
Could a big game-changer come out of this? Maybe, Congress conducts hearings and they start into the MERS debacle. Our resident real estate attorney, Kingside, mentioned that in California the laws and trustee-sale process make it tougher to fight a foreclosure in court – but about MERS he said:
The foreclosure trustee lobby is pretty powerful in California, and there is a lot of law in California that is very favorable for foreclosure trustees. That being said, this thing (MERS) may start getting legs in California, especially with the lender/servicer foreclosure trustee affiliates, and the nervousness of the title companies.
What is the MERS? From their website:
MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.
Attorneys have filed a class action lawsuit against MERS (see more here) and if they can get the attention of Congress and the mainstream media, we could have a real mess on our hands.
Is it possible that some borrowers could get a free house because of the way bankers handled the loans and paperwork? It seems far-fetched, but lawsuits will be pushing for that – and if a judge were to let it happen, the revolution won’t be far behind. But lenders/servicers will be fighting it with everything they have, so the appeals would go on for years.