Bank Of America Stops Issuing Notices Of Default In Non-Judicial States

Tyler Durden's picture

And so the latest shoe to drop in robosigning falls. Diana Olick reports that BofA has stopped its issuing notices of default in non-judicial states, such as the all critical California and Arizona, which explains the dramatic drop off in NODs in January. Previously explained by Koolaid guzzlers as an indication of economic improvement, it turns out this was merely yet more fraud being perpetrated by the big banks, which are now trying to cover up their slime trail. According to Bank of America's Dan Frahm, "We did conduct a review of the Notice of Default process. As a result we stopped the NOD process in non-judicial states." And so the double dip just got far worse.

In very parallel news, stay tuned for a blockbuster release on the Ambac-JPM lawsuit escalation.

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hedgeless_horseman's picture

If a mortgage slave falls behind, and the bank doesn't make a sound, can Shiller still hear it?

TruthInSunshine's picture

If a mortgage slave falls behind, and the bank doesn't make a sound, can Shiller still hear it?

Beautiful prose.

Cammy Le Flage's picture

Love this sentence.  Structure...word choice....just fabulous.

Triggernometry's picture

Sounds like you really love his diction

FOC 1183's picture

candidate for ZH comment of the year

Mr Lennon Hendrix's picture

Picturing a house collapsing next to a deaf and dumb Ben Bernanke wearing a trenchcoat and sipping a latte.

GreenSideUp's picture

It's stuff like this that makes ZH extra-special.  Kudos!

Eternal Student's picture

+1. Well done, indeed. It's nice to open up an article, and find a gem at the top of the comments.

6 String's picture

Is a NOD an initial notice to deliquent homeowners or is it the final leg in foreclosure? Sorry for the ignorant question.

Xibalba's picture

It's snowing in NYC.  I'm sure that the price being above $13 is to blame. 

LeftCoastRefugee's picture

BAC has already restarted that machine in California with auctions at the courthouse steps in earnest. Full speed ahead.

TruthInSunshine's picture

It's all good.

Banks and mortgagees won't have to prove they ever recorded title properly, because it's an extra burden and all, once CONgress & The Prez weigh in.

I'm sure this crisis won't and hasn't been papered over, just like every other crisis in Amerika is not and won't be - by manipulation of statistics, the printing of fiat, lying and other tactics employed (no pun intended) by politicians and central bankers.

Speaking of employed:

New study shows that under-employment may be as high as 53% for Americans
GreenSideUp's picture

+1 on the papering over.

Not surprised at 53% under-employment.  Pretty much matches my micro-local anecdotal stats, including 2 in my household.

dick cheneys ghost's picture

cant wait to see the Ambac news...........please hurry

Oh regional Indian's picture

De fault, de fraud, de vest, de test.

The perfect storm comes but it has so many damn dimensions that it's hard to grasp while watching dancing on stars or ice or whatever the latest dis-traction de jour is.

You can stay free and clear in your house till you cannot.
they very concept of home-ownership was a fraud at launch point of UNITED STATES OF AMERICA (Capitalization on purpose).

Admiralty law, study up on it. It's what "rules" america and probably most of us through convoluted treaties going back hundreds if not thousands of years.


partimer1's picture

No, its not getting worse.  the homeowners stop paying their mortgages and they stay in their homes happily ever after.  they can go out to buy iphone 5 and Ipad 2.

Alcoholic Native American's picture

How many McMansion monkeys we got out there? The hood wants to know.

Misean's picture

Recovery costs for mortgages originated 2005-2008 have got to be closing rapidly on 0. Perhaps Skank of America sees an advantage in letting everything rot in limbo for a few years. After all, they have access to the printing press.

doomandbloom's picture

lets all buy the friggin dip....

NOTW777's picture

this a buy for ipads right?  more people living mortgage free

Cdad's picture

In very parallel news, stay tuned for a blockbuster release on the Ambac-JPM lawsuit escalation.

Yes please.  And Tyler, could you be sure to include the words "anal rape" in the passage where JP Morgan is concerned?  As a personal favor.

Thank you.



TruthInSunshine's picture

'Sans lubricant,' as well.


Cdad's picture

Right.  I forgot.  Apologies, brother Truth. 


Please also include the words, "Sans lubricant."


So in review, "Anal rape sans lubricant."




Mr Lennon Hendrix's picture

Sarte would understand what I don't.

Anal rape sans lubricant, bitchez.


Thunder Dome's picture

'Sans lubricant'

It's all good.

Warrior 25 Million's picture

6 string:


NOD = notice of default, first step in nonjudicial foreclosure.



erik's picture

So it begs the question, why did they stop the NOD process in non-judicial states?  I would've expected the opposite.  Is it stopped indefinitely?

eatthebanksters's picture

There are several reasons...the first is that if they knowingly foreclose with erroneous, incomplete or fraudlulent documentation, then the foreclosed party has a cause of action for actual and punitive damages, way more than the bank loses on a foreclosure.  And, it's very easy to prove.  There are literally thousands upon thousands of these situations.  Lawyers will take theses cases on contingency because they are fairly straightforard and juicy, kind of like a whiplash victim in a car accident.  Secondly, the bank has liability to the investor if the documents prove to be incomplete or erroneous.  This invites lawsuits from the investors.  Lastly, if the process for securitization was not followed, which can be determined by following the trail of endorsements, substantial tax liabilities may have been incurred.  So, banks have a choice, bite the bullet and keep their mouths shut or potentially get fucked 3 ways.  They are finally getting their's about time.

erik's picture

excellent reply.  the rabbit hole just keeps getting deeper.

this really puts an entirely new perspective on the mortgage fiasco.  the massive drop in foreclosures will no doubt be paraded as good news over the next several months.  when July comes though the foreclosure numbers will probably break monthly all-time records if she is right about the TILA change proposed by the Fed.

wow, the implications of this are tremendous.

why haven't they stopped NODs in judicial states then too?

1fortheroad's picture

Good Question. Perhaps when the Foreclosure goes to court the Banks cannot

be sued since it was the Judge who had ruled on the proceeding.


erik's picture

That is the only explanation I can come up with as well.  Somehow the judges' decisions provide them legal cover.

markar's picture

NOD is the first step. Then Notice of trustee sale. Problem is even when a NOTS is recorded the banks often don't do the actual trustee sale. So the question begs, has the NOTS process been halted as well?

eatthebanksters's picture

If the NOD has not been filed then no NTS will be filed.  If an NOD exists, then the bank may chose whether or not to file the NTS.

Mr Lennon Hendrix's picture

This is bullish for apples!

Buy apples!

Good thing you can eat them.

goodrich4bk's picture

I susbscribe to and am closely following a few California markets (foothills, Sacto, NorthBay).  I've drawn two conclusions from the data: 1) auctions (notices of trustee's sales) are almost always "back to beny", meaning that the banks credit bid to buy the home for their REO department; and 2) the subsequent re-sale by REO is almost always at a lower price --- usually 20% or more lower---than the auction bid.

Another trend I am seeing is postponements of existing trustee's sale without the borrower's request or bankruptcy.  For example, I know of one borrower who filed BK in 2008 (Chapter 7) in which the bank had permission to foreclose as early as mid-2009.  We are now in 2011 and the bank still hasn't foreclosed because it keeps continuing the trustee's sale.  I know the owner and he is still living in the garage while the property is listed as a short sale.  The listing broker told me last week that she submitted a short sale offer in August and hasn't heard anything from the bank.

This is a perfect example of shadow inventory and the behavior of a zombie bank.  Buyers in this market are fools.

sunnydays's picture

They are stopping notices, because too many people are fighting the foreclosures now.  So they are willing to let people stay in their homes until July, when people can't fight a foreclosure anymore, once the laws take affect of the changes in TILA.  The federal reserve changed our laws and rights and come July, there will be no more suing banks against fraud or foreclosures, unless the mortgage is completely paid off.

The banks are getting smart, stop all foreclosures now and in July issue the notices and start the foreclosure proceedings, then there is nothing a homeowner can do about it.


dean.mostofi's picture

The changes to the TILA only apply to borrowers attempting to rescind pursuant to that statute. But even now most courts will not approve rescision without proof of borrower's ability to tender, so the upcoming change will not have much impact on the average person facing and fighting foreclosure. Most of the challenges to foreclosure currently being litigated in courts around the country arise from defective or fraudulent transfers of the note and mortgage and not from TILA violations.

apberusdisvet's picture

It's getting awefully close to pitchfork time.

topcallingtroll's picture

This is all scary shit but draw out slowly over several years has not been a bad strategy. Bankers have always said a problem delayed is a problem solved and that is their strategy in a nutshell.

sbenard's picture

Does anyone have a list of which states are affected?

It was here on ZH months ago that I learned, and was later reminded, that Geithner extended "infinite" (his own word) taxpayer guarantees to all Fannie/Freddie liabities on these loans. With $5.5 trillion of liabilities, this has the potential to create economic armaggedon.In other words, WE must bear the cost of this catastrophe!

I have yet to see a reason why this wouldn't happen. I think we, as Americans, have far too much faith in government and in politicians to solve all the world's problems, especially since the blame for much of this can be laid at their feet for their failed policies in the first place!

Lapri's picture

Tyler, the article doesn't say BAC has stopped sending NOD. It says BAC stopped, and has since started again.

I wonder what happens to all those NOD they issued over the past several years in non-judicial states, many (if not all) of which were signed by "robosigners" .

Drag Racer's picture

I wonder what happens to all those NOD they issued over the past several years in non-judicial states, many (if not all) of which were signed by "robosigners" .

They are resubmitting documentation

sbenard's picture

Just read that 29 states use non-judicial foreclosures or a combination of judicial and non-judicial.