If you think the housing crisis is over you would be wrong. Do you think the banks are out of trouble? You would be wrong again. Bank of America became the third lender to halt foreclosures because of bad paperwork following GMAC and JP Morgan Chase.
Bank of America, the country�s largest mortgage lender by assets, said on Friday that it was reviewing documents in all foreclosure cases now in court to evaluate if there were errors.
It is the third major lender in the last two weeks to freeze foreclosures in the 23 states where the process is controlled by courts.
But Bank of America went further than the first two lenders, GMAC Mortgage and JPMorgan Chase, which have said they will amend paperwork only in cases they think were improperly done. So far, that has amounted to only a handful of cases.
Bank of America, in an e-mailed statement, said it would �amend all affidavits in foreclosure cases that have not yet gone to judgment.�
That could mean tens of thousands of foreclosure cases would be in limbo for months or, if the consumers in default hire lawyers, years.
No where is it as bad as it is in Florida and it is actually threatening that's states economy.
There's no polite way to put this. A growing cancer is infecting the backlogged legal process of foreclosing on hundreds of thousands of homes in Florida.
It's endangering the legal and economic stability of this state. And it's exposing an appalling lack of leadership, first for allowing such a breakdown in the legal system and, now, for failing to own up to this mess and get it fixed.
How bad is it? Laws governing who actually owns a foreclosed home are becoming so suspect a new buzzword is emerging: blighted titles. Even the tepid rebound of Florida's economy may face crippling delays in resolving hundreds of thousands of foreclosures in the Sunshine State.
What's wrong? The accuracy and truthfulness of an immense flood of legal documents and affidavits some lenders and their hired lawyers use to foreclose on homes have come under such critical attack that some major banks are suspending their court cases pending internal reviews.
If the title the lender holds is questionable that represents a new problem.
Here's a big one: Title insurance companies may be scared away from offering "clear title" guarantees on foreclosed homes. That would throw into doubt who actually owns many thousands of houses � those going into foreclosure and those purchased out of foreclosure � all across the state.
Who's going to buy a home if they don't have a guarantee that they will legally own it?
Old Republic National Title has already announced it will not issue policies on GMAC foreclosures.
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