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Foreclosures Had Errors, Bank Finds

Even as Bank of America begins to restart foreclosure proceedings in 23 states on Monday, the bank confirmed that it had discovered errors, including incorrect data and misspelled names, in the paperwork it has reviewed.

For weeks, Bank of America has insisted its review had not turned up any serious errors, and emphasized that it had not found a single case where a homeowner was facing foreclosure in error.

But on Sunday, the bank revised its fairly combative public stance. Bank of America had found errors, but only in a tiny number of cases, Dan Frahm, a spokesman for the bank, said late Sunday.

“These are examples of exceptions that were caught early in the process through control steps,” Mr. Frahm said. “They do not reflect exceptions in final documents that are being resubmitted to the courts.”

Bank of America and several other institutions, including JPMorgan Chase and GMAC Mortgage, halted foreclosures in late September and early October amid a growing controversy over problematic documents, including so-called robo-signers — bank employees who say they signed foreclosure affidavits without reviewing the documents. Other foreclosure cases were initiated with missing documents or incorrect information.

As a result of its review, Bank of America has combined signing and notarization into one step, unlike in the past, when they were separate tasks. “We felt there was greater risk for error before,” Mr. Frahm said.

On Sunday, Bank of America maintained that no homes were foreclosed in error.

“The basis for our foreclosure decisions has been accurate,” he said, and he added that the bank would work to correct any problems.

Initially, Bank of America imposed the freeze in 23 states where judicial approval is required before a foreclosure can go ahead, and the bank extended it nationwide on Oct. 8. But on Oct. 18, the bank confirmed foreclosures would resume in the initial 23 states and declared it was confident in the procedures it had in place.

“We did a thorough review of the process, and we found the facts underlying the decision to foreclose have been accurate,” Barbara J. Desoer, president of Bank of America Home Loans, said at the time. “We paused while we were doing that, and now we’re moving forward.”

Since the controversy began, Bank of America shares have been pummeled and the company has repeatedly sought to reassure investors that it does not a deeper financial threat from the controversy.

What’s more, it is facing pressure from large institutional owners of troubled mortgages, including the Federal Reserve Bank of New York, Pimco and BlackRock, to buy tens of billions in bad loans back from them.

That has forced analysts to rethink earnings expectations, with some warning that the mortgage mess represents a long-term drain on an industry that only recently has gotten back on its feet.

As the nation’s largest bank and the servicer of roughly one in five American mortgages, Bank of America is closely watched by the rest of the industry, and its decision to resume foreclosures was seen as an attempt by the big banks to put the growing furor behind them.

Still, it is far from certain that banks will be able to calm the public controversy easily or quickly. Aside from the robo-signers, lawyers for homeowners have found evidence that documents were lost or even thrown out. Armed with this information, lawyers are gearing up for protracted court battles.

Bank of America’s troubled mortgage portfolio is a legacy of its July 2008 acquisition of Countrywide, a subprime mortgage specialist that was among the financial institutions with the most troubled loans, as well as its January 2009 merger with Merrill Lynch, which was a major player in the business of taking mortgages and transforming them into securities to be sold to investors.

In addition, as the beneficiary of two capital infusions by Washington under the federal bailout, Bank of America was among the banks most dependent on Washington to help survive the financial crisis, receiving $45 billion from taxpayers. Of that, $20 billion came in emergency aid after Merrill’s losses were revealed.

That money has been paid back, but the bank remains eager to maintain good relations with the government, and has emphasized that restoring its public image was a crucial factor throughout the foreclosure controversy.

Last Wednesday, Bank of America reported that operating earnings in the third quarter hit $3.1 billion, in contrast to a loss a year ago.

A version of this article appears in print on  , Section B, Page 1 of the New York edition with the headline: Foreclosures Had Errors, Bank Finds. Order Reprints | Today’s Paper | Subscribe

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