Bank of America announces in this press release that it has signed on to the principal reduction component of the Keep Your Home California program, which uses federal funds reserved for the 2008 rescue of the financial system to help homeowners behind on their mortgages.
According to the press release, Keep Your Home California’s Principal Reduction Program is part of a $2 billion, federally funded effort to help hard-hit families remain in their homes and ease the California foreclosure crisis. Bank of America has been engaged in a pilot of the principal reduction program since February, and is now moving into full participation to provide assistance to more qualified homeowners facing hardship. The bank is one of the largest servicers of single family mortgages in California, serving more than 2.2 million home loans.
For full details on the program, click here.
Bank of America has temporarily frozen all foreclosures as it examines whether it rushed the foreclosure process for thousands of homeowner’s without reading the documents. In an e-mailed statement, Bank of America said it would “amend all affidavits in foreclosure cases that have not yet gone to judgment.”
The reason for the halt stems from a document obtained by the Associated Press which shows a Bank of America official acknowledging in a legal proceeding that she signed thousands of foreclosure documents a month without reading them. The official, Renee Hertzel, said in a February deposition that she signed 7,000 to 8,000 foreclosure documents a month and typically didn’t read them. Bank of America is the third bank behind GMAC Mortgage and JP Morgan Chase to temporarily halt mortgages.
The trend is troubling, to say the least. At best it demonstrates sloppy legal work by the law firms hired by the banks – law firms that no doubt charge the banks hefty fees – a cost the banks no doubt eventually pass onto their customers. At worst, it indicates wide spread fraud in the foreclosure process. Regardless, it appears such practices are rampant in the industry. All the attention could be good news for homeowners in the Northern San Joaquin Valley, however, which has been ground zero for the foreclosure crisis after the housing bubble burst.