Even as August saw more Americans lose their homes to foreclosure than in any other month on record, there are growing concerns over the legality of many of those proceedings.
JPMorgan Chase has suspended legal proceedings on 50,000 foreclosures, due to concerns about the validity of the foreclosure documents, a spokesman for the bank told CNBC Wednesday (hat tip to Zero Hedge).
JPMorgan spokesman Tom Kelly confirmed to the AP Wednesday that "employees signed some affidavits about loan documents without personally verifying the files."
The decision is the latest signal of a potentially massive stall in the nation's foreclosure process. Last week, after GMAC Mortgage halted its foreclosures in 23 states, the Washington Post reported that one of GMAC's employees hadn't read the roughly 10,000 foreclosure documents he approved each month (and now Colorado wants to be added to that list of states). It then turned out that the "robo signer" might not have been alone.
This week, the controversy extended to JPMorgan Chase, as lawyers for a Florida homeowner challenged the person's JPMorgan foreclosure, citing a May statement from an executive for the bank who said she didn't properly review foreclosure documents before approving them.
Zero Hedge, for what it's worth, sees this as the beginning of a larger unraveling in the country's foreclosure process. Indeed, regardless of what JPMorgan determines during its review, the freeze will throw countless foreclosures into doubt.
As Bloomberg noted this week, delays in foreclosure proceedings would cripple the already wounded housing market.