Bank of America Halts Foreclosures across Nation, Analysts Have Mixed Reactions

Bank of America Halts Foreclosures across Nation

Bank of America Halts Foreclosures across Nation

On Thursday, Bank of America announced they were halting foreclosures in all 50 states while they review mortgage paperwork.  The foreclosure freeze comes after pressure from Attorney General Martha Coakley after it was discovered earlier that some banks lacked the proper paperwork to seize thousands of homes across the country.

Coakley called for the freeze amid evidence that major mortgage lenders were robo-signing thousands of foreclosure documents each month.  In Massachusetts alone, there were 9,887 completed foreclosures between January and August of this year.  The number of homes foreclosed during that time was more than all of 2009 in the state.

Coakley has said that the robo-signing of foreclosure documents has led to errors and put homeowners at unnecessary risk of losing their homes.  During the freeze, Bank of America will assess their paperwork and make sure that errors are not present prior to selling foreclosed properties.

The move will bring temporary relief to some homeowners facing foreclosure.  Some analysts have even claimed the move could help the housing market begin a recovery.  Kevin Sears, president of Massachusetts Association of Realtors has said that, “If supply shrinks, there’s certainly a possibility for prices to continue to rise.”

However, others see the move having the opposite effect.  Analysts such as Bruce Spitzer, spokesman for the Massachusetts Bankers Association, believe that the freeze may actually prolong the housing crisis.  According to Spitzer, the longer the properties hang in legal limbo, which could be years, the more neighborhoods will suffer.  Abandoned properties in neighborhoods will be empty longer, driving down the resale value of other homes in the area according to Spitzer.

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