Bank of America announced today it would resume its foreclosure practice in 23 states totaling 102,000 cases that are currently pending in court, according to a written statement by spokesperson Dan Frahm.
The decision comes only one week after BofA announced it would cancel any new and pending foreclosures in the 23 judiciary states due to questionable title searches, documentation and due diligence.
Mr. Frahm’s written email to the press did not specify whether or not Bank of America had completed its due diligence or whether it had changed its internal control procedure pertaining to title searches and legal title certification prior to closing any REO or foreclosure property.
The statement stated that “the initial assessment findings show that the basis for our foreclosure decisions is accurate”.
That simply means that the bank had the right to foreclose on the property because of non-payment by the owner but does not state whether the sale process of such property, including title certification, adhered to the applicable law of the judiciary states.
Mr. Harry Reid, Majority Senate Leader, had requested a nationwide moratorium of any foreclosures until further investigation about the process and the role of MERS (Mortgage Electronic Retrieval System) immediately after the BofA announcement on October 8.
President Obama did neither condone nor condemn such a moratorium and has not released a specific statement about mortgage lenders resuming their business as usual. It is expected that JPM-Chase, Wells Fargo and GMAC, under the Ally Bank umbrella, will follow suit in the next few days.
This still leaves a large question mark with regards to the title certification as well as title insurance.
It is unclear at this point which insurance company will actually protect the buyer by issuing a title insurance policy stating that the document provided at closing by an electronic database (MERS) and certified by an unknown and non-certified conduit person is free and clear of any future liens brought against it.
Old Republic National Title Insurance Company was the first title insurer to announce it would no longer provide such insurance policies for foreclosed properties. A phone call to the company was not immediately returned and it is not sure whether the company has changed its policy in light of BofA’s decision to resume business as usual.
Without proper title insurance, pending closings of REOs or foreclosed properties may still not proceed in the months ahead and buyers who wish to proceed are at risk by ending up with a property that may not legitimately be theirs.
Written by Nick Doms © 2010, all rights reserved.