On Monday, Bank of America reported that it was ready to continue foreclosure proceedings in Florida, as well as 22 other states, by October 25.
For a full list of states where foreclosure proceeding will resume see:Bank of America Foreclosures to Resume in 23 States.
Bank of America is the first of a number of national banks to lift the foreclosure moratorium put in place in late September due to allegations that banks, mortgage servicers and their affiliates failed to properly review, and in some cases fraudulently filed foreclosure documents with courts around the country. In a local, and particularly egregious case:
[t]he law firm of David J. Stern in Plantation, Fla., . . . assigned a team of 12 to handle 12,000 foreclosure files at once for big financial companies such as Fannie Mae, Freddie Mac and Citigroup, according to court documents. Each time a case was processed without a challenge from the homeowner, the firm was paid $1,300. It was an unusual arrangement in a legal profession that normally charges by the hour. The office was so overwhelmed with work that managers kept notary stamps lying around for anyone to use . . . .
For a further discussion on the ethical consequences of the Stern case see: The roots of foreclosure-gate: incentives and lawyers.
While the above tactics are unethical, repugnant, and a threat to the homeowners, a total moratorium placed on foreclosure proceedings could be equally as devastating to the embattled South Florida housing market. Bank-owned properties make up about 40 percent of home sales in South Florida.
“People don’t realize that this is our market,” said Matthew Murray, a Realtor with Pat Dahne Realty Group who specializes in bank-owned sales. “It’s what’s selling. If you delay the process, it’s going to delay the recovery.”
. . .
As the foreclosure moratoriums play out, a slowdown in low-priced, bank-owned properties coming through the pipeline could further hamper sales in South Florida, which depends on foreclosures more than most parts of the country.
To read about the effects of a foreclosure moratorium on South Florida see:Foreclosure freeze slows home sales.
The really interesting issue we have begun to see is the seemingly conflicted policies coming out of federal and state administrations. While state administrations (Bill McCollum, Florida’s Attorney General included) are prosecuting unlawful foreclosure practices and have even opened a 50 state joint investigation, the federal administrations do not support the idea of a nationwide moratorium fearing that such a ban would slow economic recovery.
While it is unclear just how many foreclosure filings in South Florida will be affected, Bank of America estimates that fewer than 30,000 foreclosure sales will be delayed in the entire United States.
This is welcome relief to the South Florida housing market, and to a greater extent the U.S. financial markets (Bank of America stock – BAC – rose 35 cents, or 2.9 percent to $12.33 Monday afternoon after the news).
If you suspect that your note or mortgage proceeding has been affected by faulty paperwork you should contact an attorney as soon as possible to discuss your concerns.