THIRD MAJOR LENDER TO VOLUNTARILY SUSPEND FORECLOSURES ON PROCEDURAL WORRIES

Sacramento area debtors who are considering filing either Chapter 7 or Chapter 13 may be interested to know that JPMorgan Chase has decided to re-examine documents they filed on approximately 56,000 foreclosure cases. These current issues revolve around signatures obtained by employees on affidavits about loan documents that they failed to review independently.

Chase has asked the courts reviewing the affected cases to refrain from entering judgment until they have reviewed the documents in question. Analysts from Chase say this process can take up to several weeks. Chase has decided to comply with the technical aspects of the law even though Chase officials believe the accuracy of the loan information contained within the documents will be unaffected by whether the employee signer had personal knowledge of the loan details, or not. Approximately 500,000 of borrowers who have used Chase are either 3 months or more in default or in foreclosure on their loans.

In addition to JPMorgan Chase, GMAC Mortgage and Bank of America have suspended all foreclosures in 23 states each after discovering similar problems with their respective foreclosure documents. An executive from OneWest Bank recently admitted that none of her employees read the approximate 6000 documents they sign per week.

The technical aspects of the foreclosure process confronting these major banks is that the entity foreclosing on the property must certify that whomever signs the affidavit has verified the information and knows it to be true. A signed affidavit is legal testimony that the language contained within the document is true. Legally speaking, these large banks and employees may be guilty of having perjured themselves by signing the affidavit when they have not in fact verified the information in the documents. The problem exists because the individual who does the fact-checking on a particular loan is not the same person who signs the affidavit. One Bank of America executive testified that she had signed approximately 8,000 affidavits a month without having reviewed them.

Lenders maintain an ethical as well as legal obligation to confirm that when they begin foreclosure proceedings on a property, that they do so correctly and by the book. Because the stakes are so high in any foreclosure situation the lender must eliminate any instance of mistake to prevent people from being removed from the house unjustly. If the these lenders practice of signing without confirming the accuracy of the information contained in the document is in fact industry wide, then this could only be the tip-of-the-iceberg with regard to a flawed process which would in fact affect millions of homeowners.

By having these lenders pause on the foreclosure process as they review the internal procedures under which they operate gives lawyers an opportunity to object to the action if and when appropriate. As a Sacramento Bankruptcy Attorney I always keep the best interests of my clients foremost on my mind. If you believe that you could benefit by filing for Chapter 7 or Chapter 13 please contact my office immediately for a free consultation.