(NECN: Peter Howe, Boston) "It is very difficult, and we're cleaning up a mess." That was the blunt assessment Thursday from Bank of America CEO Brian T. Moynihan, speaking in Boston just a week after the bank's bombshell announcement it would freeze foreclosures in all 50 states amid rampant paperwork problems.
Moynihan, speaking to the Boston College Chief Executives Club of Boston at the Boston Harbor Hotel, insisted officials are only double- and triple-checking documents and haven't identified actual problems relating to executives "robo signing" hundreds of foreclosure affidavits without reviewing them.
"They have not found mistakes,'' Moynihan told reporters. "They're going back to make sure that it's signed exactly the correct way and everything like that. So we don't know any more than we knew a week ago. We're just starting the process.'' Moynihan couldn't say when Bank of America, the nation's biggest mortgage lender with 15 million residential borrowers, will resume selling foreclosed homes. "We'll be done with the work in a couple of weeks, so we've been working on that. I don't know, until we're done doing the work, we don't know when the next step will take" place towards the bank beginning to sell off its glut of foreclosed homes.
What experts like Vicki Cox Golder, president of the National Association of Realtors, are warning is that the foreclosure-paperwork problem isn't just a headache for Bank of America or its shareholders -- it's a gathering crisis for the entire U.S. real estate market and economy. Golder said "the whole market" will be slow to recover until the inventory of foreclosed homes is sold off and worked down, putting a floor under the market.
Massachusetts Attorney General Martha Coakley, who's hammered Bank of America over foreclosures, said she's been pleased recently by Moynihan's willingness to work with her and other attorneys general on measures to reduce foreclosures -- and make sure those that go through are legally solid.
Coakley, who attended Moynihan's speech, said afterwards, "I think he raised what everybody should be talking about, which is, until we get a handle on these foreclosures, we're gonna have a really slow turnaround in our economy.''
Moynihan agreed that "there's no question that the recovery is going to depend on a solid mortgage market, a solid home market, a solid home finance market. None of us want to delay that outcome as to return to normalcy in these markets.''
But new data from RealtyTrac showing more homes were seized in foreclosure from July to September than any time period since the housing meltdown began in 2006 -- 288,000 in the quarter, up from 270,000 in the second quarter. Banks are on pace to seize 1.2 million U.S. homes this year. Until the nation's biggest bank gets back to working through its share of that glut, the U.S. housing market will be anything but "solid."
With videographer Christopher D. Garvin
