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2010-10-14 10:21:18
Despite B of A Freezes, Foreclosures Continue

For most Americans at risk of losing their homes —especially those in Utah — the brutal business of foreclosure goes on.

Bank of America halted foreclosures across the country to address banks’ use of flawed foreclosure paperwork, but three other banks did so only in 23 states where judges have to review foreclosures— and Utah wasn’t one of them. And other banks holding millions of mortgages have not suspended any foreclosures.

As with all real estate matters, location is everything. So what does the industry’s moratorium mean for states such as Utah, Arizona, California and Nevada that typically have no judicial review of foreclosure cases (except when homeowners sue a bank)?

For now, “It’s probably going to have little — if any — effect in Utah,” said Rick Sharga, senior vice president of RealtyTrac cq , a company that tracks foreclosures nationally.

But down the line, he said, the impact is unclear. That’s because several states that include Utah are trying to determine whether they will take any action in instances where lenders have not been taking basic steps to double-check and demonstrate their right to seize homes. “The big question is how much intervention there will be by state attorneys general and government agencies,” he said. “We won’t know that for a while.”

BofA apologized last month for foreclosing on a home in Fort Lauderdale, Fla. The homeowner didn’t even have a mortgage. The bank had failed to notice that the previous owner had repaid the mortgage loan.

The mortgage industry’s actions have been limited geographically. And even in those states affected by the banks’ announcement, banks mean different things when they say they’re halting foreclosures.

Ally Financial’s GMAC Mortgage unit, for example, is continuing to initiate foreclosures nationwide, but it has stopped evicting homeowners and selling foreclosed properties. By contrast, BofA has stopped seizing foreclosed homes in all 50 states — but is continuing to sell homes that had already been foreclosed on and is still processing new foreclosures.

Outside of the major banks, and even in states that do require a judge to look over the bank’s shoulder, foreclosures are going forward at a head-spinning pace. So the nation’s mortgage crisis goes on.

JPMorgan Chase and PNC have suspended foreclosures in the 23 states amid evidence that bank employees falsely swore they had personal knowledge of a particular case, because documents could not be located or because of other paperwork problems.

At one law firm in Florida, signatures were routinely forged, unnecessary extra fees charged, notary stamps misused and documents altered, all in the name of racking up as many foreclosures as possible, a paralegal said in a recent deposition.

So far, federal regulators and criminal investigators have taken little action, though several lawmakers have called for investigations into whether mortgage companies broke the law. The banks say that there is little to no evidence that the foreclosures were improper and note that most homeowners were in fact behind on payments.

In the 23 states with judicial oversight, the controversy centers on affidavits filed by bank employees falsely swearing to the accuracy of court documents. In one example, a BofA employee acknowledged signing up to 8,000 foreclosure documents without reading them .

Similar affidavits are not used in the 27 states where foreclosures don’t go before a judge. For example, in California, it takes just two documents — a notice of default and a notice of trustee’s sale — to be filed at the county courthouse for a bank to get the right to evict.

In many of the 27 states without judicial oversight, lenders must sign declarations that certain steps have been taken, such as attempting to work out a solution for the borrower to keep the home.

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