JP Morgan Chase Freezes Foreclosures In 23 States; Expected To Affect 56K Homeowners

The Washington Post reports:

• J.P. Morgan Chase, one of the nation's leading banks, announced Wednesday that it will freeze foreclosures in about half the country because of flawed paperwork, a move that Wall Street analysts said will pressure the rest of the industry to follow suit.

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• The paperwork problems at J.P. Morgan mirror those uncovered last week at another large mortgage lender, Ally Financial. But J.P. Morgan's decision is expected to have a much greater effect on the industry because it is held in high regard by its peers. By contrast, Ally, formerly known as GMAC, is a still under the cloud of a $17 billion federal bailout package that it has been unable to pay back.

• Both firms are investigating whether foreclosure files were improperly or fraudulently assembled, and whether their employees failed to review the documents even as they signed off on them. A growing number of homeowners - even those who missed their mortgage payments - are now scrambling to challenge the proceedings, weighing down an already overburdened court system.

For more, see J.P. Morgan Chase to freeze foreclosures over flawed paperwork.