JPMorgan Suspends Some Foreclosures
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From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
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And I'm Robert Siegel.
Thousands of people will have a little more time to stay in their homes. JP Morgan is suspending foreclosures in 23 states, while they sort out questions about some of the documents filed in the cases. It is the second major mortgage lender to do this. And the action raises another issue - the fate of foreclosed properties that have already been sold to new owners.
NPR's Jim Zarroli reports.
JIM ZARROLI: JPMorgan has said it will halt some 56,000 foreclosures in 23 states. A similar move was made by Ally Financial's GMAC Mortgage last week. The dispute involves some the paperwork submitted to the courts during foreclosure cases. The documents are supposed to be signed by bank officials who must personally ensure that they verified the details of each case, such as how much money is still owed on the mortgage. But lawyers representing foreclosure victims say bank officials were in such a hurry to process the cases that they cut corners.
Attorney Dustin Zacks(ph) says his firm deposed one JP Morgan official who signed thousands of documents each month.
Mr. DUSTIN ZACKS (Attorney, Ice Legal Fund): She hadn't looked at essentially a single document prior to signing that affidavit. So the question then becomes -how many of these were submitted to courts and were unexamined?
ZARROLI: The lawyers have been joined in their efforts by officials from a number of states. Today, Ohio's secretary of state said she would refer questions about the legality of the documents to federal prosecutors. Bank industry officials dismiss these challenges as much ado about nothing.
One official at a major lender insisted today that his bank's researchers do most of the work on foreclosures. The confusion arises, he says, because their work is often signed by supervisors who are less familiar with the details of individual cases. So the question of who has signed the documents amounts to a technicality, he says.
Todd Zywicki, professor of law at George Mason University, says this could be just a hiccup in the foreclosure process.
Professor TODD ZYWICKI (Law, George Mason University): If, however, there was a complete lack of care by lenders and foreclosure officers, then this could really be a real monkey wrench in the foreclosure system.
ZARROLI: Zywicki says the courts tend to take the integrity of foreclosure documents very seriously, and they may not look kindly at banks that are slipshod in preparing them.
If the challenges to these foreclosures stick, it raises questions about what will happen to properties that were foreclosed on and then sold, says attorney Dustin Zacks of the Ice Legal Fund.
Mr. ZACKS: Youve got folks who are living in homes now, who bought foreclosed homes who may have a problem if some of these judgments can get vacated based on the fraudulent activities of the bank.
ZARROLI: But that won't be decided any time soon.
For now, JP Morgan says it will take several weeks to reexamine some of the documents that have been challenged. Once they have done so, the bank says the foreclosure process will resume.
Jim Zarroli, NPR News, New York.
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