Foreclosures Halted

Friday, October 8, 2010 - 10:55am

Three major lenders halt foreclosures in 23 states due to legal issues.

Tens of thousands of americans on the verge of losing their homes are now getting a reprieve.

Three major mortgage lenders have stopped evictions and sales involving foreclosures in 23 states.

Companies acknowledge their legal foreclosure processes may have been improperly done and on Thursday the president said he would not sign a bill that would allow foreclosure and other documents to be accepted among multiple states.

Almost one in every seven Americans with a mortgage is either behind on payments or currently in foreclosure.

In August alone a record 95,000 homes were repossessed.

There are growing questions about the system being used to take back those homes.

Critics point to a process they call robo-signing, legal documents approved by bank employees and affiliates without ever verifying the details of the foreclosures, cases that should include the review of thousands of documents.

"The fear is that if this practice is taking place at a couple of the servicers, it may be taking place at all of the servicers," says Rick Sharga of RealtyTrac.

A Bank of America employee has already acknowledged approving up to 8,000 foreclosures a month without reading a majority of the paperwork and in a sworn deposition a GMAC agent admitted to signing off on 10,000 cases a month.

Those major lenders, along with JP Morgan Chase, have all acknowledged problems and stopped evictions and sales of foreclosed homes in 23 states.

As other states now fight to be a part of that list, analysts warn it is likely, at best just a temporary fix.

RealtyTrac incorporated says banks are expected to take over a record 1.2 million homes this year, up from about one million last year.

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