N. Carolina demands Bank of America, 13 others, halt foreclosures

CHARLOTTE, N.C. — Attorney General Roy Cooper is giving Bank of America until Friday to halt foreclosure proceedings in the state amid concerns the Charlotte bank and other lenders haven't properly reviewed documents.

In a letter sent to the bank, Cooper questioned why Bank of America voluntarily suspended foreclosures in 23 states that involve a judicial process but not in its home state. North Carolina requires a "quasi-judicial" process in which clerks of court frequently review affidavits submitted by banks.

"If Bank of America has halted foreclosure proceedings in other states due to flaws in its affidavit process, we do not understand why Bank of America should routinely continue with foreclosures with the same flaws in North Carolina," Cooper's office wrote.

The attorney general wants the bank's foreclosures suspended until it shows its processes are legal. Bank of America said it's responding to officials' concerns.

"Our initial assessment findings show the factual loan information underlying our foreclosures is accurate," spokesman Dan Frahm said, adding the bank continues its "exhaustive efforts to assist our customers who have been unable to make their mortgage payments."

The statement did not address how Bank of America would respond to the Friday deadline set by Cooper.

Cooper has asked 13 other large mortgage servicers to also halt foreclosures in the state until they prove compliance. Those lenders have until Oct. 12 to respond to the attorney general's questions. The servicers are: America, Wells Fargo, JPMorgan Chase, Citi Mortgage, SunTrust Mortgage, PHH Mortgage, OneWest Bank, PNC Mortgage, Aurora Bank, US Bank Home Mortgage, HSBC, MetLife Home Loans, BB&T Mortgage, and American Home Mortgage Servicing.

Cooper is also seeking more information about practices at Ally Financial, which has halted foreclosure-related evictions in North Carolina and 22 other states.

In an interview, Cooper said lenders could be breaking an N.C. law requiring a good-faith effort to work out loan modifications if they're improperly handling foreclosure paperwork. One of his main concerns is that homeowners get a "fair shot" at loan modifications, he said.

The attorney general has broad powers to investigate unfair and deceptive business practices, including assessing civil penalties. Cooper said he didn't want to discuss possible penalties until he has heard back from the lenders.

"We are looking to work with the lenders to make sure they get it right," he said.

Among the lenders, Wells Fargo has said its procedures are appropriate and that it doesn't plan to halt foreclosures. BB&T and HSBC also said their processes comply with the law. Citigroup said it doesn't believe a suspension is necessary because it has no reason to believe its employees haven't been following procedures. JPMorgan and Ally have said they are reviewing affidavits and will fix any problems.

SunTrust said it's reviewing the attorney general's letter, while MetLife said it intends to cooperate. OneWest declined comment. Others didn't respond or couldn't be reached.

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