Bank of America has completed its “internal review” of alleged improprieties in its foreclosure proceedings–a review of 102,000 foreclosures that took all of 17 days–and found, surprise surprise, zero mistakes:
“Bank of America announced on Monday that it would resume home foreclosures in nearly two dozen states, despite the running controversy over how banks handled tens of thousands of cases of homeowners facing eviction.
Bank of America, the nation’s largest bank and the servicer of roughly one in five American mortgages, insisted that it had not found a single example where a foreclosure proceeding was brought in error.”
Not so fast, says one state’s assistant attorney general involved in their own investigation:
“A day after the bank said it would once again pursue defaulting borrowers in the 23 states where foreclosures were overseen by the courts, judges in Florida said they were expecting even more challenges from defaulting homeowners.
…“There has been an attempt by some of the major servicers to indicate there are no problems,” said Patrick Madigan, an assistant attorney general in Iowa. “We’re not at the end of this process. We’re at the beginning.”
But BofA has much bigger problems than a few lawsuits from a few homeowners, the big boys are coming after them to buy back the mortgage bonds packed with toxic garbage that BofA was peddling:
“The fears behind mortgage bond-gate might be real after all. Reports indicate that Bank of America is has been asked to repurchase some of its mortgage bonds by some very prominent investors due to procedural failures. Who are those investors? BlackRock Inc. — the largest money manager in the world, PIMCO — the largest Bond fund investor, and the New York Federal Reserve are said to be among them…Metlife, the biggest U.S. life insurer, is expected to join this group of investors demanding repurchase.
Bank of America is the target thanks to its acquisition of Countrywide in 2008. These investors say that Countrywide failed to properly service mortgages which were repacked into bonds. How many bonds? According to Bloomberg, these investors want Bank of America to repurchase $47 billion worth.”
Here’s why this entire fiasco, from origination to securitization to foreclosure, is going to be difficult if not impossible to unwind. From a BofA June court filing:
“It appears as though many loans and other mortgage-related assets have been double and even triple-pledged to various constituencies”…[T]hat is the reason that two different banks sometimes try to simultaneously foreclose on the same home.”
Finally, the feds are getting in on the act, too:
“Members of President Obama’s Financial Fraud Enforcement Task Force [Justice, Treasury, HUD, and the SEC] and other administration officials are scheduled to meet Wednesday to discuss the foreclosure crisis.”
Frankly, I have no confidence that anything substantive will come from this group. I see one of two outcomes. Either they open an investigation, bury it, and we never hear a word of it again, or they go after a few low-level flunkies and the MOTU skate. As usual.
To be continued…