A few days ago, Ally Financial (previously known as GMAC Inc.), and JPMorganChase independently announced they were putting a temporary halt to foreclosures in 23 states (in those states which require judicial foreclosure). It turns out they were employing robo-siogners to initiate foreclosures on autopilot. Their employees swore to personal knowledge of foreclosure documents when in fact quite the opposite was true: they could not have had “personal knowledge” if they were signing hundreds foreclosure documents per day per person. In many cases they had no proof of title either.
Now title insurers are beginning to catch on.
Old Republic National Title Insurance informed agents Friday that it would not write policies on foreclosed Chase properties until the issue is resolved one way or the other. The Minneapolis based title insurer already refuses to write policies on properties which had been foreclosed upon by GMAC Mortgage/Ally Financial.
To homeowners facing foreclosure, these events could bring much-welcomed relief. Our sources report some banks are sending out letters confirming mortgage modifications on properties they seem unable to foreclose upon.
Foreclosure investors, on the other hand, are less excited. Unless they obtain title insurance, they cannot secure institutional financing.
How widespread the problem is among other lenders is an open question. Bank of America has already joined the club of banks which admitted to robo-signing foreclosure documents. But only Bank of America halted all judicial and non-judicial foreclosures in order to not further embarass themselves.
In states which do not require judicial foreclosure it’s still more or less business as usual, at least for the other lenders.