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Bank Of America, JPMorgan Chase And GMAC Suspend Foreclosures Due To Serious Concerns About Foreclosure Procedures

In an absolutely stunning development, Bank of America, JPMorgan Chase and GMAC Mortgage have all suspended foreclosures in many U.S. states due to serious concerns about foreclosure procedures.  There has been an absolutely massive tsunami of foreclosures in recent years and it turns out that mortgage company officials dealing with foreclosure paperwork have not always taken the time to process each foreclosure properly.  Things have gotten so bad that a number of U.S. states have actually opened up official investigations that are looking into some of these foreclosure practices.  But what did everyone expect?  There has been such a dramatic surge in foreclosures over the past several years that it was almost inevitable that shortcuts would start to be taken.  Back in 2005, there were only about 100,000 home repossessions in the United States.  Last year there were about 1 million home repossessions in the U.S. and RealtyTrac is projecting that there will be a record 1.2 million home repossessions this year.  Needless to say, this has created a paperwork headache for mortgage companies of unprecedented magnitude.

This crisis exploded toward the end of this past week and is starting to make headlines from coast to coast.  As mentioned above, some of the largest mortgage companies in the U.S. have taken the extreme step of actually suspending foreclosures until this mess can be sorted out.  The following are summaries of what is happening with some of the lenders at the center of this storm….   

Bank Of America

On Friday, Bank of America announced that it has suspended foreclosures in 23 states in order to assess whether it has been conducting them properly. 

This announcement comes on the heels of a report that one Bank of America official actually confessed during a Massachusetts bankruptcy case that she signed up to 8,000 foreclosure documents a month and typically did not read them “because of the volume”.

JPMorgan Chase

JPMorgan Chase has announced that they have suspended foreclosures in 23 states as well. Approximately 56,000 foreclosure proceedings are affected by this decision.

On Friday, California Attorney General Jerry Brown ordered JPMorgan to suspend foreclosures in that state until JPMorgan proves that their foreclosure procedures comply with the law.

In addition, Connecticut Attorney General Richard Blumenthal has announced that he has begun an investigation of his own into JPMorgan’s foreclosure practices.  Blumenthal is calling on Connecticut courts to freeze JPMorgan foreclosures for 60 days while the investigation develops.

GMAC Mortgage

Last month, GMAC Mortgage also suspended foreclosures in 23 U.S. states.  Company officials have acknowledged that thousands of affidavits supporting foreclosure proceedings have been signed without being read beforehand. 

GMAC made headlines across the nation recently when a Maine state court judge reprimanded GMAC for their foreclosure procedures.  In particular, the Maine state court judge ruled that an affidavit from GMAC to support a foreclosure in one case “was submitted in bad faith.”  The judge in that case stated that GMAC’s “high-volume and careless approach” to affidavit signing was very disturbing.

All of these developments threaten to turn the home foreclosure mess in the United States into an absolute quagmire.

Now some title insurance companies are wondering if they should continue to write policies for homes foreclosed by these mortgage lenders.

In fact, one of the biggest title insurance companies in the United States, Old Republic National Title Insurance, has already announced that it will no longer write new policies for homes foreclosed upon by JPMorgan Chase and GMAC Mortgage.

If more title insurance companies follow suit, the implications could be staggering.

For example, there may come a point where many home buyers may not be able to purchase homes that have been foreclosed upon if they are not able to obtain insurance that the home that they are buying has a clear title.

All of this is yet another indication that the U.S. real estate market is going to be a complete and total mess for years to come.

According to Bloomberg, housing prices in the United States are likely to decline for another three years as 12 million more homes get put on the market.

Meanwhile, banks have really tightened their lending standards and median household income is falling in almost every single major U.S. city, so there are not a lot of buyers out there to soak up all of these homes.

For much more on why the U.S. housing market is likely to get even worse, please see our previous article entitled “15 Bone Chilling Signs That Part Two Of The Double Dip Housing Crash Has Begun“.

So what do you think?  Do you think that there is much hope for the U.S. housing market?  Feel free to leave a comment with your opinion below….

The Beginning Of The End - The New Novel About The Future Of America By Michael T. Snyder
  • Not so Mad Max

    Banks cutting corners to kick people out of thier homes “I am shocked and appalled”. Ok kidding over isn’t it strange that it’s 23 states? Is it just me or is anybody else curious about what’s been happening in the other 27 states? Have JPM, BOA, GMAC been foreclosing homes in these other states and adhering to the letter of the law?

  • http://www.homeloanpresident.com Mark Lieberman

    One problem that a lot of these foreclosed homes have that is not being talked about in the media today. Is that there are a lot of McMansions in this foreclosure group that were build in the early 2000′s when people had good jobs and money. But in the year 2010 home buyers don’t want to even look at them, because they are “Blood Suckers” to heat/cool and maintain, so they just sit there on the MLS forever! America need another William Levitt to build us 1940 style smaller homes that we must have in 2010 and the years to come, not McMansions from are insane decadent past.

  • Ladyl

    Fraud is the KEY word here, this is old news, this comes away back from Cwide days, I have a loan with BOA, taken out with Cwide, and I actually have emails going back in forth with the loan officer at the time, where I questing him, if our loan was a full doc loan as he was saying then why didn’t I have to submit any financial paper work, and also how come I did not need a letter from my parents stating that they were giving us a give of equity, and his won words were, “the less the better, in order to get the loan approved, don’t worry, just show that you have the money in the bank and they will never know if was a gift” and not worry about submitting any paper work… THIS IS FRAUD… I have submitted that to BOA, to the CEO an he could care less, they tell me oh ok send us the email, but they never actual even acknowledge , I am thinking to actually submit all those copies to media outlets from them to see that this is a ongoing problem from way back…nothing new…

  • J

    I am going to move in with family. I think my kids would benefit from grandparents, aunts, uncles and cousins and I’ll benefit financially by splitting costs and being able to save money.

    I hope this helps spiritually and, as houses are expected to decline for another three years, it seems to be a logical choice. (As opposed to purchasing RE now or in the near future). I’ll save and wait for deals in 2013 or so. If we can save 1/2 of our mtg payment for the next 3 years, we should be able to save a nice down payment.

    This isn’t definite, but we are strongly leaning toward it.

  • Zack

    Unfortunately we know where this is going – banks are going to lobby for yet another bailout to recover their losses on these failed mortgages. No more bailouts. Let the banks absorb the cost of their own greed. Let’s end the moral hazard.

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  • El Pollo de Oro

    One type of foreclosure that we aren’t hearing about as much is the problem of tax-based foreclosures, which are foreclosures that come about when the homeowner fails to make property tax payments. Even if one’s mortgage is paid off, the homeowner can still lose his/her home for falling behind on property tax payments–and this is a problem all over The Banana Republic of America (BRA), where property taxes are being raised left and right and homeowners who have fallen upon hard times (REALLY hard times) are having to choose between paying for food and heat in the winter and making property tax payments.

    It’s a vicious cycle–millions lose jobs, tax revenue plummets, local governments raise property taxes to offset loss of revenue, people who are already hurting have an even more difficult time paying property taxes, tax-based foreclosure results, homeowner becomes former homeowner, ex-homeowner winds up sleeping in car, ex-homeowner becomes less employable because ex-homeowner no longer has a roof over his/her head except for the car, property values continue to decrease in neighborhood where ex-homeowner used to live.

    Mortgage-based foreclosures = the bank boots you out.
    Tax-based foreclosures = the government boots you out.

    Either way, a lot more of American neighborhoods are in bad, bad shape in the BRA.

  • Merchip Gal

    Yes, this is bringing the housing market to a virtual halt. Again. And after they received TARP money (tax money). GMAC is denying new loans in South Florida for credit worthy people (scores @ almost 800) and excellent loan-to-value, using an out-of-context Fannie Mae guideline as legal cover for denial. I mean, after underwriters APPROVED the loan, it had to be submitted to Corporate Legal offices because the loan was requested in South Florida (isn’t that red-lining?) and came back with the denial with the mentioned excuse. Can provide facts and context if anybody is interested.

  • k

    I see more obama bailouts with our money somewhere in this mess. This is another big govt blame, allowing people to buy more home than they could afford with such lax rules, and dumb people doing it. let the free market work or our country will look like cuba for crying out lous. Stop the govt interference in making laws over every thing in our lives, the free market, capitalism works..

  • Sara Sanderson

    How can I finfd out if my home’s foreclosure is among those being suspended?

  • Tracie Robinson

    I took out both of my mortgages with Countrywide and had no problems until I lost a job, got a new one, took a 10% pay cut because of the economy, had to take in two sick parents – one of which died so I had to cash out a 401K just to bury them, had a major car accident, two surgeries and a divorce. At this point, I have fought with Bank of America since they bought the loan that a deferment and continuous payments make more sense than them taking my home. Mind you, I have only missed 3 payments but the interest and late fee penalties have added up to over $12,000 in a year and 8 months that they have dragged their heels to try to help. They lost the original signed copy of my modification yet they cashed my check and a year later, nothing is resolved. I make too much money to qualify for the making homes affordable plan yet I am supporting 3 people on less than $80k a year. Seems to me the banks do not care how many homes they own….as long as they are getting some government money. Those of us that are in the middle are the ones that are on the losing end of every option. BAC is unreliable and probably one of the worst organizations I have ever had to deal with.

  • rick allen

    I currently loss my job, in july, have no unemployment comp, due to former employer fighting on it. not found a job yet. wife works only part time. tried to do a loan mod with Chase, back in november,2009, due to my wifes cut in work. took them 5 months, to adjust my payment $60 less? Is this a mod? well now, I have applied for another loan mod, only to be told 4 weeks later, I can’t, only 1 within 12 months? they sent me the paperwork to do it, go figure! have missed 3 payments, have sent forclourse papers. thru talking with one of them, loan officer, states loan mod still being looked at? To me, they have no idea what anyone is doing in this company. for as big as Chase is, this is sorry. Can’t get them to help you, cause, they don’t care to. I have been a customer of case for 8+ years, it will end soon.

  • ezMaverick

    Foreclosures are freeze for how long? 3,6,9 months? Or they don’t know for how long?

  • Azar

    I believe this is another game. Each time that something comes up, some people or corporations benefit. Our loss is big corporation gain. I am not thinking of losing my home because I consider myself one of people that have no income and thinking how to feed the family; I am thinking who is making fortune with this new game. Indymac changed to One West bank and everybody knows how much money they made. Banks, lenders or investors, whatever you want to name them, made money from TARP plan due to unemployment excuse. Now another game called Foreclosure Freeze. Millionaires become billionaires and low incomes become lower incomes. I just sit aside and watch the route of economy

  • V

    What do you do, if you went thru a very bad divorce, you had to leave your house to foreclosure. Your ex still lives in it and won’t move out. You quit making payments over two years. They send you paper work, when they were going to take it two times, but never seen anything happen. I need them to take the house, so they can kill my credit, and I can build it back up very slowly. I called Chase many times, I get ran into circles. Fannie Mae is handling it. Then when you call Fannie Mae they give you a number of an attorney that is working with chase. They have no answers, they tell me to call back Chase. I need some real answers here. Is anyone else going thru this.

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