JPMorgan Chase halts foreclosures in process to review files for possible errors in affidavitsBy AP
Wednesday, September 29, 2010
JPMorgan suspends certain foreclosures
NEW YORK — JPMorgan Chase is suspending more than 50,000 foreclosures as it reviews the legitimacy of legal documents in those cases, the bank said Wednesday.
JPMorgan is the second major company to take such action this month, underscoring a growing legal problem. The issue could stall an already overloaded foreclosure process and may mean some homeowners lost their homes illegally.
Analysts don’t expect the delays to reduce the number of foreclosures in the long run.
“It will probably slow things down for a couple months while these documents are reviewed,” said Rick Sharga, a senior vice president at foreclosure listing service RealtyTrac Inc. “It won’t stop things.”
But if the problem turns up at more of the largest mortgage companies, a foreclosure crisis that’s already likely to drag on for several more years could persist even longer.
JPMorgan acknowledged that its employees signed some affidavits about loan documents without personally verifying the files. These affidavits identify who holds the original mortgage note in foreclosure cases.
The company believes the information in the affidavits is accurate, and that the affidavits were prepared by “appropriate personnel,” spokesman Tom Kelly said Wednesday.
The bank asked judges to not enter judgments against homeowners facing foreclosure until the review is done. It expects the process to take a few weeks.
In a similar move, GMAC Mortgage LLC last week halted certain evictions and sales of foreclosed homes in 23 states to review those cases. The company said it found procedural errors in some foreclosure affidavits.
“The error is not related to the accuracy of the underlying transaction or the ultimate decisions to have exercised the foreclosure proceedings,” GMAC, which is owned by Ally Financial Inc., said in a statement at the time.
Fitch Ratings said Wednesday it’s asking mortgage companies about their internal processes for executing foreclosure affidavits. If it finds the processes lacking, Fitch will consider downgrading the company’s rating.
The agency also said if the issue is widespread, the resulting delays and extra costs to foreclose could increase losses related to residential mortgage-backed securities.
Lenders took back more homes in August than any other month since the start of the mortgage fallout, according to foreclosure tracker RealtyTrac Inc. Banks have accelerated repossessions to clear out their backlog of bad loans.
AP Real Estate Writer Alan Zibel contributed to this report.
Tags: Debt And Bond Markets, Foreclosure Rates, New York, North America, Personal Finance, Personal Loans, Real Estate, United States