In a Senate hearing Tuesday, Bank of America (BAC) vowed that it would improve its foreclosure operations and policies. The move, an attempt to ward off documentation problems that caused the bank to halt foreclosure proceedings in October, was announced the same day that JPMorgan Chase (JPM) said it also may have made procedural mistakes related to foreclosures.
Barbara Desoer, president of Bank of America's home loans and insurance operations, promised that every foreclosure affidavit would be properly reviewed and notarized, adding that the bank is replacing previously filed documents for as many as 102,000 pending foreclosure cases that haven't gone before a judge. She added that the bank's records were accurate and that it didn't mistakenly foreclose on any properties.
"Even though our review has indicated the basis for our foreclosure decisions has been accurate, we have identified areas for improvement as a result of our intensive review," Desoer said in her testimony to the U.S. Senate Banking Committee. "These changes in the foreclosure process include, among other things, a new affidavit form and additional quality control checks."
The hearing comes as federal and state regulators are probing whether financial institutions improperly filed foreclosure documents amid a rush to process them. Bank of America, JPMorgan Chase and Ally Financial's GMAC (GMA) Mortgage division, which collectively service $6.4 trillion in mortgages, all are under investigation.
In recent weeks, several financial institutions have delayed foreclosures to evaluate the possibility that the sheer volume of documents prevented bank officials from reading, verifying or notarizing the documents they were signing. In October, only 10 days after Bank of America halted foreclosures in all 50 states, it said it would begin preparing the documentation to resume foreclosures in 23 of those states.
Also in October, JPMorgan Chase broadened a review of its foreclosure process to about 115,000 cases in 41 states, and GMAC Mortgage said it would review its foreclosure procedures in all 50 states. David Lowman, who runs JPMorgan's mortgage operations, Tuesday told the Senate Committee that bank executives may have signed foreclosure affadavits without verifying them. But like Bank of America, JPMorgan also claims it didn't improperly foreclose on any properties.