Georgia Foreclosures Remain Halted As Lenders Resume Seizures
We wrote last week about the nationwide investigation into “robo-signing” and other illegal foreclosure practices and the resulting voluntary foreclosure freeze put into place by lenders. This week, Bank of America announced plans to restart the foreclosure process in the 23 states that require judicial approval for foreclosures. As Georgia is not one of those states, local homeowners will not be immediately affected by the news.
In announcing that it would resume the seizure of more than 100,000 homes, Bank of America said that it has a legal right to continue with foreclosures despite the accusations of improperly executed documents. Ally Financial’s GMAC Mortgage plans to similarly resume foreclosures following a review of the documents involved in the allegations. Because the allegedly improper foreclosure practices were similar among most lenders, analysts say that other banks will not be far behind in restarting the foreclosure process.
While Bank of America says it is “confident” of its foreclosure decisions, it will continue to delay foreclosures in the 27 states, including Georgia, that don’t require the approval of a judge before a home is seized. Because the lack of judicial oversight makes it more difficult to detect illegal actions in these states, lenders plan to perform a more extensive review of foreclosure cases before proceeding with home seizures.
Because foreclosures will restart so quickly, the cost of the foreclosure document controversy may be significantly less than investors had previously feared, causing bank stocks that fell just weeks ago to rise again. Bank of America says that the controversy will delay less than 30,000 of its foreclosures.
However, new evidence appears to indicate that lenders’ legal troubles may be far from over. In a deposition released by the Florida attorney general’s office, a law firm office manager admitted to signing 1,000 files a day without reviewing them, often allowing paralegals to forge her signature. Because these practices occurred in one of the 23 states in which a lengthy court process is required for a foreclosure to proceed, it does not bode well for Georgia and the 26 other states that do not require such scrutiny.
Source: Atlanta Journal-Constitution, “Bank of America starts thaw in foreclosure freeze”, Alan Zibel, 18 October 2010