A Bloomberg report shows homeowners’ attorneys’ claims were right: The problem of faulty foreclosure documents was not limited to GMAC. A JPMorgan Chase (JPM) employee testified in a deposition that she was one of eight managers who combined to sign some 18,000 documents a month without the personal knowledge the documents claimed they had. As these revelations come out across the industry, the foreclosure market is likely to shut down while courts figure out what to do. Already-sold foreclosures may have their titles clouded. Foreclosures under way will be stopped or slowed while documents are checked, and future foreclosures will be delayed. That’s because the improper affidavits leave open the possibility that the foreclosing bank doesn’t really own the loan it’s foreclosing on. After all, not all accusations of bad mortgage documentation involve “technicalities.”
Of course, there’s one easy thing the banks can do to address this mess, assuming they still want to foreclose on all these properties: Hire enough people to have employees personally and properly verify the information in the documents they sign and send to court.