Additionally, Wells Fargo supports the Consumer Financial Protection Bureau's proposed rule that would prevent lenders from starting foreclosure proceedings until Bank of America CEO Brian Moynihan said in the hearing that the bank's suspension of all foreclosures would run through the end of the quarter, which ends June A spokesperson for Bank of America said on Wednesday that Moyninhan was referring to the June 30 moratorium deadline and said the policy applied to both bank-owned loans as well as government-backed loans the bank services.
Dimon's written testimony specified that the bank has extended forbearance options for about 2 million mortgage, auto and credit card accounts since the start of the pandemic. A Chase spokesperson said in an email to CNBC Make It that credit card relief accounts for a little more than half of the 2 million customers impacted and that the difference is split almost equally between home lending forbearances and auto relief.
On the mortgage foreclosure moratorium, the Chase spokesperson said the bank is continuing to align with the various state and federal foreclosure moratorium deadlines for all loans in its portfolio. On the federal level, that deadline is currently set for June Chase declined to comment on whether the bank supported the CFPB's proposed rule banning foreclosure proceedings until , while Bank of America has yet to respond.
Sign up now: Get smarter about your money and career with our weekly newsletter. The Senate Banking Committee will hold hearings after next month's elections to look into allegations that the nation's largest lenders have improperly foreclosed on struggling borrowers. The hearings would take place during a "lame duck" session of Congress after the Nov. The new members would not take office until next year.
At issue is the validity of a system banks and other lenders use when they move to foreclose on a mortgage and seize a property. Rather than presenting an entire set of documents in court, the lender typically submits an affidavit establishing their claim signed by an employee who has reviewed the file. The validity of that process has been successfully challenged by attorneys representing homeowners facing foreclosure. Last month, GMAC said it was halting foreclosure sales and evictions after an employee admitted in a deposition that he had signed 10, documents a month without personally verifying the mortgage information.
JP Morgan Chase put 50, foreclosures on hold after one of its employees made a similar admission. Bankers argue that the flawed review documents don't undercut their original foreclosure claim, which they say can still be established by providing the full documentation. But given the large number of foreclosure cases in the pipeline, a full review of every case could be very costly.
The unraveling of the mortgage paper trail could be costly for more than just lenders trying to foreclose on a home. Difficulty establishing the legal title to a mortgage could also create headaches for companies that wrote title insurance on the property.
Lenders aren't the only ones facing headaches if they can't properly establish ownership of a mortgage. During the height of the boom, millions of mortgages were pooled in trusts that issued bonds backed by monthly payments from those mortgages. Why should we, as real estate professionals and homeowners, love this? Instead of releasing a glut of discounted bank-owned properties into an overcrowded winter market, lenders will be holding onto these properties longer while these technical issues are sorted out.
There was recently very good news in our market and the largest threat to it was the aforementioned wave of bank owned properties hitting the market over the naturally slower winter months. These sales would depress values and make appraisals difficult during the spring market. With the advent of these lenders having to get this process fixed and halting foreclosures, that headwind has stopped blowing.
It has been said that it would be better if these foreclosures were just pushed though the system.
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