Bank of America is halting foreclosure sales in all 50 states as part of a widening investigation into flaws in the process, the company announced Friday.
The announcement came a week after the nation’s largest bank said it was freezing home foreclosures in 23 states where foreclosures must be approved by the courts. The latest move by Bank of America extends a review of foreclosure documents to all states, regardless of the required legal processes.
The bank said the foreclosure process on delinquent borrowers will continue, but it will not proceed to judgment or a foreclosure sale.
“Our ongoing assessment shows the basis for our past foreclosure decisions is accurate,” said Bank of America (BAC, Fortune 500) spokesman Dan Frahm in an e-mailed statement.
Bank of America is not the only bank to freeze foreclosures.
JPMorgan Chase (JPM, Fortune 500) announced last week that it will also halt proceedings for about 56,000 homeowners after learning that its employees may have approved foreclosures without personally reviewing loan files.
JPMorgan Chase had no comment on Friday’s announcement by Bank of America.
Ally Financial, previously known as GMAC, the finance arm of General Motors, has also paused foreclosures in the 23 states.
State attorneys general have stepped up pressure on banks in recent days after it was revealed that some bank employees had signed foreclosure affidavits without verifying that the documents were accurate, a process now known as “robo-signing.”
Ohio’s attorney general has filed a lawsuit against Ally Financial and its subsidiary GMAC Mortgage for allegedly submitting fraudulent documents in hundreds of foreclosure cases across the state.
Sen. Christopher Dodd, D-Conn., the chairman of the Senate Banking Committee, announced Friday that he will hold a hearing to investigate allegations of improper mortgage servicing and foreclosure processing on Nov. 16, the day after the Senate returns from recess.
On Thursday, the White House said that President Obama won’t sign a bill that could have made it easier for courts to clear foreclosures. The bill would have required federal and state courts to recognize documents that were notarized in other states.
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