J.P. Morgan Chase freezes 56,000 foreclosures

J.P. Morgan Chase issued a freeze on 56,000 foreclosures on Wednesday, acknowledging that some employees may have signed off on documents submitted in support of them without proper review.

Chase spokesman Tom Kelly said the company has requested that the courts not enter judgments in pending matters until the company has had time to re-examine the filings "to verify that the affidavits and other documents meet the standard of personal knowledge or review where that is required."

"While Chase does not expect find any factual problems and that customers have been harmed, but if we do find any cases we will take appropriate action," Kelly said.

In May, a Chase employee named Beth Ann Cottrell said in a sworn deposition that she and her team signed off on up to 18,000 foreclosure affidavits and other documents a month without reviewing them thoroughly.

Another mortgage company, Ally Financial--the nation's fifth largest lender--on Sept. 20 halted evictions and resale of repossessed homes in 23 states. Jeffrey Stephan, a document processor for the company, admitted that he had signed off on 10,000 pieces of foreclosure paperwork a month without reading them.

State attorneys in at least nine states have announced investigations into the matter.

By Ariana Eunjung Cha | September 29, 2010; 5:07 PM ET

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