Imagine being a woman, home alone, and hearing a suspected intruder trying to open your door. Scary thought for some, but it was reality for one woman, who immediately called police when she heard someone dismantling her front door to gain entry.
The good news is the woman ended up safe. The bad news is the person attempting to open her door was a bank official, who had erroneously foreclosed the woman’s home without her knowledge and was attempting to remove the lock and replace it with a new one.
This is only one story. But as we learned shockingly last week, it is far from an uncommon story. GMAC Mortgage, JP Morgan Chase and Bank of America have suspended foreclosures in 23 states after it was disclosed that hundreds of homes were erroneously foreclosed due to “robo-signing“. In case you’re unaware, “Robo-signers” are bank middle managers who sign the paperwork that allow banks to repossess homes that are in default, without properly reviewing the accuracy of the documents they are signing.
Now, Senate Majority Leader Harry Reid (D-Nev.) has called on all major lenders to halt foreclosures across the country indefinitely, following an announcement last Friday from Bank of America that it will suspend all such proceedings until a review of possible paperwork problems is completed. “I thank Bank of America for doing the right thing by suspending actions on foreclosures while this investigation runs its course,” Reid said. “I urge other major mortgage servicers to consider expanding the area where they have halted foreclosures to all 50 states as well.”
Reid is the latest Democrat to join a growing list of lawmakers and state attorneys general who have called for immediate and greater scrutiny of the foreclosure process. Homeowner advocates have long said that lenders often use dubious paperwork to expedite the eviction of homeowners who are behind on their payments, so they are fighting back against the practice they say is immoral and wrong.
This latest moratorium has put many defaulted homeowners at ease and has put a much needed spotlight on the fairness in foreclosure practices.
