WEB EXTRA: Wells Fargo will re-file 55,000 foreclosures
A Wells Fargo customer enters a bank branch in San Francisco, Calif.
Wells Fargo & Co. said it's going to re-file paperwork for 55,000 foreclosures, which are pending before courts in 23 states.
The nation's fourth-largest bank on Wednesday said it found problems with the documents, but has no plans to issue a blanket moratorium on foreclosures, like rival Bank of America did.
Wells Fargo identified instances where bank employees and notaries did not strictly adhere to required procedures when signing off on foreclosure affidavits. That's the same error three competing mortgage handlers -- Bank of America Corp., JPMorgan Chase & Co. and servicer GMAC Mortgage -- have encountered.
The issues do not relate to the quality of the customer and loan data, Wells Fargo said. And none of the instances led to foreclosures which should not have otherwise occurred, the company said.
Wells Fargo did not identify how many of the 55,000 foreclosure affidavits were improperly approved in the final paperwork stage.
"In September 2010, borrowers who have completed foreclosure were on average 16 months delinquent on their payments," Mike Heid, co-president of Wells Fargo Home Mortgage, said in a news release. "When all options have been exhausted, we believe foreclosures should not be delayed."
The process of submitting supplemental affidavits will begin immediately. The company said it hopes to have them completed by mid-November.
Paperwork problems facing the mortgage customer service industry are likely to lead to a temporary decrease in the total number of foreclosures filed in the last quarter of this year, industry onlookers say. Foreclosure numbers will bounce back up, however, once the affidavits are re-filed next year.
RealtyTrac, a leading online marketplace for foreclosure properties, on Thursday released its third-quarter 2010 Metropolitan Foreclosure Market Report. The report shows that cities in California, Florida, Nevada and Arizona, once again, accounted for all top 10 foreclosure rates among metropolitan areas with a population of 200,000 or more.
Among all 206 metro areas tracked by RealtyTrac, 133 (65 percent) posted year-over-year increases in foreclosure activity. Eleven of the nation's 20 largest metro areas posted year-over-year increases.
Rick Sharga, vice president of RealtyTrac, expects foreclosures to peak next year as adjustable rate mortgages adjust upward.
"When you think about the fact that a lot of these borrowers were only marginally qualified to begin with and would now be faced with paying a thousand dollars more a month on a property that's lost 30, 40, 50 percent of its value since the time they bought it, it's a pretty toxic mix," Sharga said.
Marketplace Reporter Nancy Marshall Genzer contributed to this report.