Greg Bear

Greg Flahive reports: Bank of America halts foreclosure sales nationwide

Greg Flahive reports: Bank of America halts foreclosure sales nationwide

Attorney Greg Flahive states that the nation’s accelerating home-mortgage crisis deepened Friday when Bank of America said it would immediately halt foreclosure sales in all 50 states, a development that for the first time pulls struggling California homeowners into the scandal surrounding questionable tactics by big lenders.

The decision by the nation’s largest mortgage lender goes well beyond similar moves by other large banks that have frozen foreclosures only in the 23 states that have a “judicial foreclosure” process, citing concerns about how legal documents were processed. California was unaffected by those moves because it has a nonjudicial foreclosure process, but BofA’s decision could impact tens of thousands of borrowers in this state fighting to hold on to their homes.

“We’re being overly cautious on this,” said Bank of America spokesman Rick Simon, who added the review “should take a few weeks. We’ll continue to process delinquent loans, but we won’t proceed to judgment or sales while we review our processes.”

Several lenders have acknowledged recently that tens of thousands of legal affidavits were signed without the underlying facts being verified, casting a shadow on the legality of the foreclosures. BofA’s action, said Kevin Stein of the advocacy group California Reinvestment Coalition, moves the crisis “beyond the judicial versus nonjudicial distinction. Putting a hold on foreclosures in all 50 states tells me they can’t be sure they haven’t been foreclosing on people unlawfully, regardless of what state they’re in.”

Frustrations mount

But critics who have worked closely with homeowners facing foreclosure and have seen how frustrating the process can be say they’re skeptical. Maggie McCarthy, a foreclosure counselor in Sunnyvale, says that while lenders have been making more of an effort to communicate more clearly with borrowers, she’s not surprised by allegations of bogus affidavits and other corner-cutting tricks.

“Working with lenders is like working in the dark,” McCarthy said. “Often the lender says yes to a trial plan with lower payments, but then after it ends, we’re asked to resend all the income information and they say ‘Sorry, we can’t do a loan mod.’ So why did they put these people into the trial plan to begin with?”

Maureen Burkley, a 45-year-old self-employed consultant in Willow Glen who faced foreclosure last year after her income was cut, finally got her loan modified by Wells Fargo — but she says it took her “17 months of hell to do it.”

“You fill out paperwork, they claim they didn’t get it; they make you start all over again, four or five times, even though I’d fax it in and call the next day to confirm,” Burkley said. “One person tells you they got it, the next person says they didn’t. It felt like nobody knew what anyone else was doing, and it was maddening.

“I think that’s part of their strategy,” said Burkley, who couldn’t bear to lose her townhouse after the death of her German shepherd, Lucky, who died of cancer after sharing the home with her for 14 years. “They try and drive you crazy so you’ll give up and stop fighting.”

Hammond said Wells Fargo was “pleased that we were able to provide Ms. Burkley a loan modification. In some cases, it can take some time to fully understand a borrower’s situation to determine whether or not a modification is possible, but we work to exhaust all options in an effort to avoid foreclosure.”

While foreclosures come to a halt in selected states, raising questions about the fate of homes already taken back by banks, California seems to be in standby mode. Attorney General and gubernatorial candidate Jerry Brown has asked JPMorgan Chase and Ally Financial, formerly known as GMAC, to either prove they are complying with California law or stop doing foreclosures in California until they can.

Prosecutors elsewhere have said the banks’ actions amount to fraud, since they are required by law to personally verify any information sworn to in an affidavit.

Greg Flahive of Flahive Law Corporation assists homeowners with loan modifications. He can be reached at 877-FLAHIVE or http://www.FlahiveLawCorporation.com

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Authors@Google: Greg Bear