Bank of America, GMAC say they’re ready to resume foreclosures

By Nelson D. Schwartz and Andrew Martin
New York Times / October 19, 2010

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Bank of America Corp. said yesterday that it would resume home foreclosures in nearly two dozen states, despite the ongoing controversy over how banks handled tens of thousands of cases of homeowners facing eviction.

Bank of America, the nation’s largest bank and the servicer of roughly 1 in 5 US mortgages, said it had not found a single example where a foreclosure proceeding was brought in error.

The move is likely to encourage other giant lenders to resume the foreclosure process that threatens 2 million homeowners.

Meanwhile, GMAC Mortgage, whose procedures helped prompt the controversy when one of its executives testified that he had signed 10,000 documents in a month, is also moving forward with foreclosures.

“We announced a temporary suspension of evictions and foreclosure sales in the 23 judicial states several weeks ago so we could commence the appropriate review,’’ said Gina Proia, a spokeswoman for GMAC. “As cases are being reviewed and, when needed, remediated, the foreclosure process moves forward as appropriate.’’

Guy Cecala of Inside Mortgage Finance, an industry publication, said: “This draws a line in the sand that the banks expect this problem will be over in relatively short order and it will be back to business as usual.’’

Bank of America plans to begin filing new paperwork for 102,000 foreclosures by Monday.

Consumer advocates and lawyers for homeowners expressed skepticism that Bank of America could complete a review of the paperwork so quickly. But the banking industry has come under increasing pressure from investors to resolve the problem.

Investors have fled bank stocks, worrying that the foreclosure halt would cost banks billions of dollars and further harm on the housing market.

Bank of America said it would resume foreclosures in the 23 states where judicial approval was required after an internal review turned up no evidence that cases were filed in error.

However, the company’s suspension of the process will remain in effect in the 27 other states, including Massachusetts, that do not require a judge’s approval to foreclose, as the bank’s paperwork review proceeds state by state. It was the only bank to initiate a nationwide freeze.

“We did a thorough review of the process, and we found the facts underlying the decision to foreclose have been accurate,’’ said Barbara J. Desoer, president of Bank of America Home Loans.

In the other 27 states, Desoer said, she expects foreclosures to resume within weeks.

Bank of America noted that the major holders of mortgages — Fannie Mae and Freddie Mac — as well as private investors had signed off on its decision.