Is it too soon for mortgage servicers to resume foreclosure procedures?

On Monday, Bank of America spokesman said that the bank plans to resume foreclosures next week in more than 100,000 homes in the 23 states that require judge’s approval. Amid the multiple attempts from opponets to the bank’s involvement in the latest mortgage fiasco, some wonder if it is too soon for loan servicers to resume foreclosure procedures.

Although enphasys has been made on the fact that halting foreclosure will in turn slow down any progress the real estate market might be having, many still believe that a halt on all foreclosures Is the way to go.

Just last week, attorneys general in all 50 states joined together to conduct an investigation to determine whether lenders broke the law by processing uncessesary foreclosures. Furthermore, multiple law suits are surfacing around the country as homeowners realize the opportunity in the situation. Homeonwers now have a chance to dispute their foreclosure notes on the basis that the documents bakcing up the foreclosure might indeed contain errors from the lender’s part.

In adition, a federal law enforcement official says the FBI is now joing the fight against lenders that could have broken criminal laws in the mortgage foreclosure crisis. “The FBI is at the start of a lengthy sorting-out process in which agents will look into what caused the financial institutions to mishandle the flood of paperwork in the historic avalanche of foreclosures,” the law enforcement official says.

The main issue to be identified is the intent behind this so called “errors” in foreclosure douments. The idea is to figure out whether the lenders actually conducted this operations with criminal intent or if indeed the lenders just made mistakes as a result of the overwhelming overflow of foreclosures and the pressure to speed up operations which in turn would help stabilize the market even faster.

Not only is the federal government getting involved, but also the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, has demanded reviews at top banks, including Bank of America, J.P. Morgan Chase & Co. and Citigroup Inc. SEC Chairman Mary Schapiro said Tuesday her agency is looking into "issues with respect to disclosure, misrepresentations or omissions."

Furthermore, another challenge for lenders are judges around the country who are handling these foreclsoure cases. Judges have the authority to discipline bank officials If there is a violation of procedural rules. In adittion, they could also force thousands of foreclosure cases that usually just go through quick rulings, to go instead to full trials.
“Judges won't take well to banks that filed erroneous documents with their courts,” said Indiana Attorney General Greg Zoeller.

"There could be some serious consequences," including criminal charges, Zoeller said.