
Chase Home Loans and Ally Financial's home mortgage unit GMAC, announced that they would halt foreclosures in 23 states which require court involvement before taking a person's home (known as "judicial foreclosure" states). The reason? So called "robo-signing."
Robo-signing is becoming known as the practice of bank employees signing hundreds or even thousands of foreclosure-related documents without verifying the information contained in them or without signing them in front of a notary (who later notarizes all of the documents outside the presence of the employee) and then submitting them to a court in support of a foreclosure proceeding. When a party submits documents to a court, the information contained in them are supposed to be true. If they're not, then the court can consider them fraudulent.
Information recently came out that employees of both Chase and GMAC executed thousands of documents without verifying the information contained in them. Thus the validity of the documents, which were filed in support of a foreclosure action, have been called into question.
Some of the states that are currently subject to the foreclosure moratorium are: Connecticut, Florida, New Jersey, New York, North Carolina, Illinois and Pennsylvania.
Meanwhile, numerous state attorneys general are beginning to demand a halt to foreclosure actions in their states until the issues can be sorted out.
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