WRAPUP 2-BofA suspends foreclosures, states eye JPMorgan
* JPMorgan faces demands in California, Connecticut
* Judge faults GMAC for cutting corners
* Fannie Mae says to tighten oversight
* BofA suspends foreclosures; Citi will not-source (Adds Citigroup statement, additional source, Wells Fargo statement)
By Jonathan Stempel and Maria Aspan
NEW YORK, Oct 1 (Reuters) - Amid growing public anger over U.S. home seizures, Bank of America Corp (BAC.N) has suspended some of its foreclosures and JPMorgan Chase & Co (JPM.N) has come under investigation in California and Connecticut.
Bank of America said on Friday it is delaying foreclosures in 23 states to review whether it has been conducting them properly. Two other big lenders -- JPMorgan and Ally Financial Inc's GMAC Mortgage -- have already suspended foreclosures.
Also, a Maine state court judge reprimanded GMAC Mortgage for how it repossesses homes. The judge concluded that GMAC submitted a company official's affidavit to support a foreclosure "in bad faith."
Companies are scrambling to defend and where needed improve their foreclosure procedures in the face of anger among homeowners and regulators.
The issue came to the forefront last month when GMAC revealed that officials had signed thousands of affidavits supporting such proceedings without knowing their contents.
Banks are expected to take over a record 1.2 million homes this year, up from about 1 million last year and just 100,000 as recently as 2005, real estate data company RealtyTrac Inc said on Thursday. [ID:nN29249478]
Bank of America will halt foreclosures in the 23 states where court approval is needed and amend affidavits "to be certain affidavits have followed the correct procedures," Rick Simon, a spokesman for the largest U.S. bank, said in a statement.
It was not immediately clear how many proceedings would be affected by Bank of America's decision, and Simon did not respond to emailed questions about the number of affected foreclosures.
The statement followed an Associated Press report that a Bank of America official admitted in a Massachusetts bankruptcy case that she signed 7,000 to 8,000 foreclosure documents a month and "typically" did not read them "because of the volume."
Last month, GMAC halted evictions in the 23 states, including Florida and New York. JPMorgan, meanwhile, has halted some 56,000 foreclosure proceedings in the 23 states.
Citigroup Inc (C.N) has no plans to suspend foreclosures, a person familiar with the matter said on Friday.
The bank said this week that it reviews its foreclosure document-handling process on an ongoing basis.
Wells Fargo & Co's (WFC.N) policies "satisfy us that the affidavits we sign are accurate," spokesman Jason Menke said in an emailed statement on Friday. "We will stand by our affidavits and, if we find an error, we will take the appropriate corrective action."
On Friday, Milwaukee-based Marshall & Ilsley Corp MI.N extended a 2008 foreclosure moratorium through year end.
Fannie Mae (FNMA.OB), which provides much credit in the housing market despite being in a conservatorship after its 2008 near-failure, said it will tighten oversight of servicers to ensure they follow the rules.
Investigators in at least six states are examining foreclosures by GMAC, JPMorgan or both.
On Friday, California Attorney General Jerry Brown ordered JPMorgan to stop foreclosures in that state, which does not require court orders to foreclose, until it proves it complies with the law.
He issued a similar directive to Ally last week, and said both lenders have admitted their review of important foreclosure documents was a "ruse."
Meanwhile, Connecticut Attorney General Richard Blumenthal said he opened a probe into JPMorgan , and called on state courts to freeze home foreclosures for 60 days. Blumenthal is also examining GMAC.
"This freeze should stop a foreclosure steamroller," Blumenthal said in a statement. Connecticut is among the 23 states that use court procedures for foreclosures.
JPMorgan spokesman Tom Kelly declined to comment.
Brown is a candidate to become California's governor. Blumenthal is running for the U.S. Senate. Both are Democrats.
In a ruling made available to media on Friday, a Maine state judge ordered Fannie Mae to cover some attorney's fees of a borrower, Nicolle Bradbury, because of GMAC's misconduct as its servicing agent in a foreclosure proceeding.
The judge, Keith Powers, said he was displeased with GMAC's "high-volume and careless approach" to affidavit signing, despite a 2006 Florida court order that it fix its procedures.
"Despite the Florida court's order, GMAC's flagrant disregard apparently persists," Powers wrote. "It is well past the time for such practices to end." He said an affidavit submitted in Bradbury's case "was submitted in bad faith."
The court accepted an amended affidavit, and the facts that led to the foreclosure in the case are not in dispute, Ally spokeswoman Gina Proia in a statement. (Reporting by Scot Paltrow in Washington, D.C., and Maria Aspan and Jonathan Stempel in New York; Editing by Gary Hill)
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