JPMorgan Chase Suspends 56,000 Foreclosures

JPMorgan became the second major lender after GMAC/Ally Bank to halt pending foreclosures, halting proceedings on 56,000 homes. This follows revelations that “robo-signer” “foreclosure mills” were filing paperwork that would be gracious to call “sloppy,” at the rate of 10,000 a day.

Chase Mortgage said that it would systematically review the files and correct the errors, which it qualified as technical in nature.

“The GMAC announcement was the mushroom cloud,” a Florida defense lawyer told the New York Times. “The fallout will burn through the entire mortgage servicing industry.”

The new scrutiny is expected to slow an already sluggardly foreclosure process, and homeowners fighting foreclosure will seize on the “dirty documents” to save their homes.

JPMorgan Suspending Foreclosures [New York Times]

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  1. aja175 says:

    Good. Hold the banks accountable for their rubber stamp decisions. Will this help those foreclosed on already that shouldn’t have been?

    • TuxthePenguin says:

      If you read the article (and the previous series that have been mushrooming) it wasn’t the banks that were causing all these problems. They’d contract a third-party to handle the foreclosure process. It was that third party that did this crap.

      Just goes to show the danger of outsourcing a function.

      • Anathema777 says:

        Blame for these problems should still come back to the banks. If you outsource such a vital function and don’t set up the proper checks and balances to make certain that it’s working, then it’s still your fault.

        • c!tizen says:

          Exactly. When you call tech support for your Dell computer and get some outsourced 3rd party company that can’t speak english and does nothing but reads from scripts and give back-handed apologies do you curse the 3rd party company or Dell?

          It should be the same for Banks as well. Just because they can’t be “bothered” to do the actual work involved with mortgages, you know… beyond collecting on them, doesn’t mean they should be released from responsibility when that other company screws things up. If they cared about their customers then they’d take the time and invest in the resources to make sure things get done right. Kudos to them for stepping up and stopping everything though.

      • mac-phisto says:

        doesn’t matter – still the bank’s responsibility.

        FDIC: Guidance for Managing Third-Party Risk
        An institution’s board of directors and senior management are ultimately responsible for managing activities conducted through third-party relationships, and identifying and controlling the risks arising from such relationships, to the same extent as if the activity were handled within the institution.

        OCC: Third-Party Relationships (PDF)
        A bank’s use of third parties to achieve its strategic goals does not diminish the responsibility of the board of directors and management to ensure that the third-party activity is conducted in a safe and sound manner and in compliance with applicable laws.

      • aja175 says:

        It absolutely is the banks problem. The agreement is between the customer and the bank. Whatever the bank does to service that agreement is on them.

    • sonneillon says:

      Probably not. I work for the banks inspecting foreclosed properties. And someone would likely have to spend a great deal of money on attorneys fees to prove the bank did not have a valid claim on their home. The banks will just re-file on properties currently in foreclosure, but the handful of home owners that have lawyers fighting the foreclosure will likely get the process start over from scratch and get an extra year payment free.

  2. c!tizen says:

    Good

  3. jason in boston says:

    That is just scary how you can “automate” something that should have many checks and balances.

  4. dreamfish says:

    Good… but only to a point. Individual people contacting them to complain got nowhere but it took embarrasment of them in Congress and the media to get them to change their policy. Hardly a moral decision.

  5. Holybalheadedchrist! says:

    Good.

  6. PanCake BuTT says:

    Oh Chase, you do have a ♥. ‘pysche’ … we all know that if you did go forward with 56k foreclosures it would cost you more, as oppose to a ‘halt’ . Absolute malarkey.

  7. TuxthePenguin says:

    Maybe I’m alone on this, but where was our court system in checking that all this paperwork was valid? Shouldn’t someone on that end have noticed this problems?

    • catnapped says:

      Banks paid them off

      • TuxthePenguin says:

        If that’s the case, they need to be fired, arrested and put in jail. Both on the public worker side and at the banks.

    • ARP says:

      They don’t have the resources and the legal system isn’t isn’t structured that way. The bank files a foreclosure proceeding, the court doesn’t check if the documents are sufficient to support that claim. They only check that the correct documents are filed (cover sheets, claim forms, etc.) and the fees are paid. It’s up to the defendant to dispute that there is sufficient documentation to support the claim. Now, the bank’s lawyers do have an obligation to perform reasonable inquiry, have good faith claim, etc. It’s Rule 11 in Federal Civil Procedure, but most states have an equivalent. They seem to have fallen down here, but again the defendant must dispute that in court. It’s very rare that you can get sanctions for not following Rule 11 (or equivalent), unless its egregious. And unlike natural persons, they can usually claim a paperwork error and get out of it.

      So, the banks are taking advantage of our legal system to churn out claims and see which ones stick. Worst case is that they’ll get sanctions in a small number of cases. Judges are reluctant to award punitive sanctions since many judges are elected and business= campaign funds.

      So, the banks are using their money adva

    • NYGuy1976 says:

      There are probably too many of them for the courts to check thoroughly. Imagine the courts in Clark county Nevada.

  8. fredbiscotti says:

    Fuck. The. Banks.

  9. CortJstr says:

    So let’s say I recently bought a condo that Chase had foreclosed on. They can’t unforeclose it and take it back, right?

    • GearheadGeek says:

      It’s doubtful that they could take it back… the bank and the title company might having a protracted legal pissing contest to see who owed money to the previous owner, though.

    • sir_eccles says:

      My guess would be that is what title insurance is for.

  10. Loias supports harsher punishments against corporations says:

    Can anyone find why the scrutiny finally came to light? I mean, we all knew there had to be some dirty business going on, also evidenced by several incidents.

    But why did it come to light NOW, versus many, many months ago? What was the catayst?

  11. DanKelley98 says:

    Couldn’t happen to a nicer bunch…(all of ‘em)!

  12. Excuse My Ambition Deficit Disorder says:

    The funny thing is (not really that funny) but the only ones they stopped and questioned are the ones that just happen to be in the 23 states that require the approval of the court. Think maybe they stopped it because of the huge cost it would burden poor JPMorgan share holders.

    Wonder how many they did let go through that were not in the the above mentioned 23 states…and are not correct but they let go through anyways…

  13. diagoro says:

    I’m personally through this, have been hanging on for a while. I’ve had more than a few cases where the ‘third party’ would suddenly send me twenty notices, all the same, stating the home would be sold at auction within a few weeks. That’s twenty of the same, twn via regular mail and ten via certified. The first time this happened I called EMC/JPMorgan and was told that they had no idea who that company was, to not worry about it. The next time it was the same company with the same process, yet not EMC/JPMorgan admitted it was the third party that handles foreclosures for them.

    Last month, while the a short-sale is being reviewed by an EMC/JPMorgan negotiator, and near the final stages (they had already approved the short-sale process two months before and stated any foreclosure would be on hold), this same third party again tries to sell the home via a foreclosure auction. Not just the letters this time though, they went as far as taping a note to the front gate.

    I can understand how a large company might want to find alternatives to a process, especially when there are such a large amount of homes in my situation. Yet there should also be some proper communication. From my experience, there isn’t any. It seems like EMC/JPMorgan just said “foreclose when it gets to this point, don’t bother checking with us”. This is beyond sketchy……

  14. Hoss says:

    Why is everyone saying good? They are simply updating their foreclosure boilerplate which shouldn’t take more than a few days

  15. diagoro says:

    And if you want to hear a different result from the total communication anarchy in the business, how about a home being sold in shor-sale THAN in foreclosure auction a few days later…..

    http://www.latimes.com/ktla-condo-sold-twice,0,3466342.story

    • Excuse My Ambition Deficit Disorder says:

      I’ll admit that I don’t know much about deeds to a home, but I always thought there was only one deed to any home. It doesn’t make sense, at least to me, how there can be two “legal’ deeds to the same home which can be given out to anyone. I do love the finger pointing in the story…love how none of the businesses involved will take ownership of the problem and make it right.

  16. BarbaraAnnJackson says:

    Commercial and residential real estate foreclosures via deceptive and fraudulent proceedings enable lenders to repeatedly, illegally flip properties, and enables falsified IRS form 1099-A’s. Foreclosure fraud is the best means by which unscrupulous foreclosure mill lawyers deceptively auction and bid (or insiders bid) and acquire those properties; and some neighborhoods blighted.

    Foreclosure fraud deliberately utilizes defunct mortgage lenders companies or companies which no longer own promissory notes; huge ransom “fees makes it even harder for property owners to regain properties. Two particular companies “which benefit from fraudulent foreclosures are Wells Fargo and Freddie Mac.

    Representations about Freddie Mac billion dollar losses should be weighed against the needless money that Freddie –as well as other lenders– PAY foreclosure mills and debt collectors who utilize courtrooms to outmaneuver and persecute property owners who oppose fraudulent foreclosures. Further, when justified lawsuits for fraud –as well as for OUTRAGEOUS “Unfair Debt Collection Practices,” become filed against lenders and mills, those same lawyers make additional $$$$ from litigating and concealing their own wrongdoing!

    Further, THE SHOCKING fabricated pleadings filed in Bankruptcy courts for FRAUDULENT REPOSSESSION of commercial and residential real estate res ipsa loquitur is demonstration of intentional foreclosure fraud. Foreclosure fraud has many far reaching effects; for example, years later, people UNFAIRLY become answerable for IRS tax bills and unjustified “deficiency judgments.” *MORE @ http://open.salon.com/blog/wwwlawgraceorg/2010/08/18/case_in_point_foreclosure_mills_judicial_fraud_consumer

  17. dumblonde says:

    Again, this is why foreclosures should go through court or at least through a neutral party that will evaluate everything’s in order.