The Consumer Strikes Back: Bank of America Backs Off

Due to its use of "robo-signers," Bank of American has halted all foreclosures in all fifty states.  Other major mortgage lenders and servicers -- PNC Financial, Chase, Ally Financial -- have suspended foreclosures in 23 states.  It is a wonderful testament to the law that two pro-bono attorneys blew the lid off this practice.  These lenders recklessly lent money and securitized those reckless loans, selling them to other unsuspecting investors.  Those same lenders now are unwilling to spend the money to properly review the very files they underwrote before foreclosing on Americans homes.  One robo-signer reviewed one foreclosure every 90 seconds he was at work.  Some of these files are hundreds of pages long.  And the affidavits signed by the robo-signers declare that the signer reviewed all the material facts in the file.

The audacity of the lenders and servicers in taking away ordinary Americans homes in this way is astounding.  To me, these are not "technical mistakes."

Of course, the effect of casting doubt on so many foreclosures also will be to unsettle many homeowners who purchased foreclosed homes.  Title companies are now not certain they can or have issued good title to those homes.  If the foreclosure was based on defective documents or practices, the sale to the new owners is open to attack.

Several news stories provide fascinating overviews of this foreclosure crisis.