Freeze on foreclosures widens

WASHINGTON - A mushrooming crisis over potential flaws in foreclosure documents is threatening to throw the real estate industry into chaos, as Bank of America on Friday became the first bank to stop taking back tens of thousands of foreclosed homes in all 50 states.

The move, along with decisions to halt foreclosures by PNC Financial Services Inc. and Litton Loan Servicing Lp, a mortgage-servicer owned by Goldman Sachs, adds to growing concerns that lenders have been evicting homeowners using flawed court papers, without verifying the information in them.

Charlotte, N.C.-based Bank of America Corp., the nation's largest bank, said Friday it would no longer complete foreclosures in all 50 states as it reviews documents used to process foreclosures.

A week earlier, the company had said it would only do so in New York and the 22 other states where foreclosures must be approved by a judge.

The bank did so in reaction to mounting pressure from public officials inquiring about the accuracy of foreclosure documents. A company spokesman said the bank still believes its documents are correct but wants to satisfy officials' concerns.

Sen. Christopher Dodd (D-Conn.), chairman of the Senate Banking Committee, said Friday that he would hold a hearing on the issue next month.

"Regulators at the federal, state and local levels have a responsibility to uphold the law and protect consumers from unfair foreclosure, and lenders have a duty to not cut corners around the law," he said.- AP