California lawmakers are praising Bank of America's announcement today that it's halting foreclosures in all 50 states. The largest bank in the country says it will refrain from taking possession of homes from defaulted borrowers until it completes a review of its documents.
In a statement, state Assemblyman Ted Lieu said Bank of America is doing the right thing. On Thursday, the Democrat from Torrance called for a temporary moratorium on foreclosures in California and an investigation into growing evidence of sloppy or fraudulent document processing by banks and their lawyers.
Last week, Bank of America halted foreclosures in 23 states. It's the first bank to expand the freeze nationwide in response to pressure by state and federal officials over violations in document processing.
Democratic Congresswoman Loretta Sanchez of Orange County commended BofA for - in her words - "finally deciding to halt the practice of kicking people out of their homes first, and asking questions later."
Attorney General and gubernatorial candidate Jerry Brown called on the state's other lenders to halt foreclosures until they can demonstrate that they're following state law.
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.
Bank of America's nationwide halt will apply to homes that the bank is taking back itself and those for which it has transferred the papers to mortgage buyers Fannie Mae and Freddie Mac.
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.
The Associated Press contributed to this report.