Today the White House warned that it would pursue banks if they violated any mortgage practice laws and as a result this warning has added even more pressure on the financial sector after Bank of America and GMAC both released their halt on home foreclosures.
The White House also said that even if banks lift their freezes, government investigations will proceed as planned.
This move by the White House was fueled by weeks of damaging accusations that financial institutions' have been using poor paperwork practices regarding foreclosures which has caused some borrowers to be illegally evicted from their homes.
Intense public outrage has sparked government probes and has raised new concerns about threats to bank earnings and the health of the fragile housing market. It's been estimated that nearly 3 million homes have been foreclosed on since January 2007.
White House spokesman Robert Gibbs said in a statement today, "As institutions are determining their next steps in addressing these issues, we remain committed to holding accountable any bank that has violated the law."
"In addition to strongly supporting the investigation by the state attorneys general, the administration's Federal Housing Administration and Financial Fraud Enforcement Task Force have undertaken their own regulatory and enforcement investigation into the foreclosure process."
Bank of America released a statement yesterday and said that it plans to resume seizing more than 100,000 homes in 23 states next week and that they have a legal right to foreclose despite accusations that documents used in the process were flawed.
However, Bank of America is still delaying foreclosures in the remaining 27 states that do not require a judge's approval.
The reason Bank of America stopped foreclosures nationwide was due to allegations that bank employees simply signed foreclosure documents without truly reading them which may have contained errors and as a result some homeowners were evicted anyway that should not have been.
Bank of America plans to resubmit documents with new signatures in the 23 states that do require a judge's approval to restart the foreclosure process.