This whole foreclosure debacle is getting much, much bigger.
Connecticut Attorney General Richard Blumenthal today called for a 60-day foreclosure freeze in the state because of “defective docs.”
He made the request after a second major bank, Chase, acknowledged that there were cases where employees may have signed affidavits about loan documents on the basis of file reviews done by other personnel.
Last week, Ally (GMAC Mortgage) told brokers and agents to immediately stop evictions, cash-for-keys transactions, and lockouts in 23 states after the company warned it could need to take corrective action in connection with some foreclosures.
Blumenthal is investigating whether the pair, along with other loan servicers, have engaged in similar practices.
He noted that submitting defective documents is “possible fraud upon the court,” and argued that the Judicial Department should take additional measures to restore the integrity of foreclosure documents.
“This freeze should stop a foreclosure steamroller based on defective documents and enable effective remedies,” Blumenthal said in a release.
“The actions of GMAC/Ally and JP Morgan are inexcusable…Banks that lured consumers into loans they couldn’t afford now seek to stampede them into foreclosure. We must stop this runaway foreclosure train, restoring proper procedure and property owner rights.”
It’s looking like all foreclosures nationwide may grind to a halt, which in effect, will probably just delay the inevitable even more.