Chase Bank Foreclosures Halted Because of Faulty Documents

By Anne McNulty

According to reports in both the Washington Post and Bloomberg News, the faulty Morgan Chase documents contain inaccurate statements and instances of careless oversight on the part of bank managers.

Faulty Foreclosure Documents at Two Lending Institutions Lead to Further Scrutiny According to mortgage industry analysts, the foreclosure document flaws at J.P. Morgan may also soon be found in other lending institutions, which could result in even more foreclosure freezes.

One example the Post cites is another mortgage lender, Ally Financial, formerly known as GMAC. This financial institution is also being scrutinized for its paperwork, reflecting the same issues as found at Morgan Chase.

Ally is itself financially unstable and to date, it still owes the federal government $17 billion dollars that it received as a bailout package.

Frustrated homeowners who are facing evictions because of lapsed payments, are now beginning to bring their foreclosure cases to court. These cases will continue to mount if other lending institutions are found to have the same issues.
According to Bloomberg News, The flawed foreclosure documents at Morgan Chase came to light after a Florida homeowner in Palm Beach County, challenged his foreclosure procedure in court.

At a May, 17 court deposition, pertaining to this case, a Morgan Chase home finance operation supervisor, named Beth Cottrell, stated that she signed thousands of foreclosure documents without personally checking the loan records. She went on to say that she relied upon other bank employees to question the validity and accuracy of the paperwork.

She and18 other managers were responsible for reviewing and signing about 18,000 foreclosure documents a month. She continued to state that unless someone came to her and pointed out a paperwork flaw, she just went ahead and signed off on the foreclosure documents.

After hearing this testimony, the attorneys for the Florida homeowner, asked the judge to throw out the foreclosure. Soon afterward, Chase Morgan halted foreclosures that had questionable documents.

Already, Chase Morgan’s action has resulted in California, Colorado, Connecticut and Illinois, halting foreclosures that were ordered from Ally Financial where problematic documents have also been discovered.
It seems likely with these recent revelations coming from two major lending institutions, many frustrated homeowners may have lost or been forced out of their homes illegally. The resulting court cases could possibly hold up foreclosure proceedings for years.

The Washington Post quoted Senator Al Franken as saying,” With millions of families losing their homes, it’s inexcusable for companies like Ally to be this patently negligent. I want the federal government to hold Ally accountable and ensure that homeowners who wrongly received foreclosure get the compensation they deserve.”

Ally Financial executives are not commenting at this time on any ongoing investigations, but do maintain that they don’t anticipate that any document processing errors have resulted in any inappropriate foreclosures.

Meanwhile, homeowners wait to see what happens next.
References: Washington Post: J.P. Morgan will halt foreclosures

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