Friday, October 8, 2010

Connecticut halts all foreclosures for all banks

Connecticut halts all foreclosures for all banks
Ariana Eunjung Cha | October 1, 2010

Connecticut Attorney General Richard Blumenthal on Friday ordered a moratorium on all foreclosures by all banks for 60 days--the most radical action taken by a state on issue of document irregularities.

California also expanded the moratorium on foreclosures it announced last week on Ally Financial foreclosures to include those by J.P. Morgan Chase.

Calling the companies' review of key foreclosure documents "a ruse," California Attorney General Jerry Brown (D) ordered J.P. Morgan to prove it is following the law before it continues foreclosures in the state.

Both J.P. Morgan Chase and Ally have frozen foreclosures in 23 states because some employees had signed off on foreclosure paperwork without properly reviewing the files.

Colorado and Illinois have stopped foreclosures by Ally and at least seven other states have launched probes into the issue. But Connecticut is the first to institute an industry-wide ban.

in Connecticut, Blumenthal said in a statement that he is investigating J.P. Morgan Chase and Ally, formerly GMAC, which is the recipient of a $17 billion federal bailout and majority-owned by the U.S. Treasury, as well as other lenders.

He said the actions of J.P. Morgan and Ally are a "possible fraud on the court undermining the integrity of the legal process and consumers' ability to fight foreclosures.

"This freeze should stop a foreclosure steamroller based on defective documents and enable effective remedies," Blumenthal said.

Ally Financial had already voluntarily suspended evictions and resales of homes in 23 states that require a court order for foreclosures. J.P. Morgan's actions were a bit broader--the bank suspended all foreclosures in the same 23 states. Connecticut was on the original list of 23 but California was not.

Both Blumenthal and Brown are running in high-profile races for higher office in their respective states in the Nov. 2 election -- Blumenthal for U.S. Senate, and Brown for governor.

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