Bank of America recently announced that it will shut down its foreclosure operations temporarily. Government-run mortgage firm Freddie Mac has put a lot of pressure on Bank of America recently, and has expressed concerns about the foreclosure procedures at Bank of America. The firm is worried that the bank is not carefully examining all of the foreclosures it is handling. The pressure has led to Bank of America's decision to temporarily halt its foreclosure deals while it evaluates its paperwork procedures.
This announcement comes as bad news to the consumer banking industry as a whole. Banks have had a lot of foreclosures to deal with amidst the economic recovery. This event will slow the foreclosure process and potentially damage the housing market's recovery. On the other hand, while Bank of America has halted its operations, Wells Fargo said it will continue to plow ahead. This is a positive development for the industry, because it means that some foreclosures will continue to go through as the housing market mess gets sorted out.
This event could prove to be very advantageous for consumers. People who are 90 days past due or in foreclosure could get some extra time while Bank of America tries to evaluate its internal processes. Hopefully consumers can use this time to their advantage and save enough money to pay off their overdue balances. This also gives people who have already defaulted on their mortgages a break while the bank sorts out their financial fate.
-Justin Schaffer
Source: WSJ: http://online.wsj.com/article/SB10001424052748704657304575539963605720860.html
Hopefully this will give more time to those families. But in the other hand, I think this may discourage other banks from making mortgages because of the fear that the government make look closer at their business. This could damage the accessibility mortgages.
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