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Bank of America said it’s extended its review of foreclosure documents to all 50 states, and will stop all foreclosure sales until the review is completed.The ongoing assessment, previously confined to 23 states where courts have jurisdiction over foreclosures, “shows the basis for foreclosure decisions is accurate,” Bank of America said in a statement.According to its most recent quarterly report to investors, Bank of America sold $453 million in foreclosed properties during the second quarter, leaving it with an inventory of properties valued at $1.74 billion.

via BofA halts foreclosure sales in all 50 states | Inman News.

Crazy. Just postponing the inevitable. It already has years of inventory that it will need to sell.

In the crazy world of increasing foreclosures, foreclosures are costly, they hurt both the bank and the person being foreclosed on. Short Sales, are the most common alternative to avoid foreclosure, but short sales are very time consuming, ineffective, and subject to lots of fraudulent behavior.

Another solution, that hasn’t been used much as a foreclosure prevention option is the “Deed in Lieu of Foreclosure” It’s so simple, and so much more beneficial to many banks and underwater borrowers, that it’s surprising they haven’t been used more. Apparently the light has been lit, and deeds in lieu of foreclosure are becoming a real, viable, alternative to foreclosure. Here is an excerpt from a Washington Post Article on Deeds in Lieu of Foreclosure, by Kenneth Harney:

Deeds in lieu also are surging because they provide a win-win for borrowers and mortgage investors that short sales often cannot match. Tops on the list: speed. Travis Hamel Olsen, chief operating officer of Loan Resolution, a Scottsdale, Ariz., firm that works with lenders to solve troubled borrowers’ problems, said deeds in lieu represent “a very expeditious way to move on” for underwater borrowers who are facing potential foreclosure.

“A lot of owners just want to be finished with it now,” he said. “They don’t want to deal with [the house] anymore.” They don’t want to deal with real estate agents or signs on the front lawn that reveal their financial squeeze to neighbors. They don’t want to haggle with potential buyers coming in with lowball offers. But they also don’t want to simply walk away — strategically default — because that will crater their credit files and scores for as much as seven years.

Greg Hebner, president of the MOS Group of San Diego, which also works with banks and investors across the country to resolve defaulting borrowers’ situations, said a key motivation is that lenders are stuck with massive backlogs of underwater homes that haven’t yet gone through foreclosure and been put on the market — the so-called shadow inventory.

Not only is it cheaper for them to do deeds in lieu to gain control of those properties, but with mortgage rates below 5 percent, they also will probably be able to resell them faster and on potentially more favorable terms in the summer and fall.

via Kenneth R. Harney – Kenneth Harney: Foreclosure alternative gaining favor.