* Hires external counsel to review affidavit process
* Bank has about 56,000 current foreclosure proceedings
(Adds shares, size of servicing portfolio)
NEW YORK, Sept 29 JPMorgan Chase and Co (JPM.N)
said on Wednesday it is delaying current foreclosure
proceedings, adding to worries U.S. mortgage servicers are
struggling to deal with the millions of homeowners unable to
pay their mortgages.
The New York bank's decision to temporarily suspend current
foreclosure proceedings follows a similar move by Ally
Financial last week, after that company found some of its
employees had not personally checked information in foreclosure
documents filed to court.
At least four state attorneys general are investigating
Ally, formerly known as GMAC, for its foreclosure procedures.
"It would not surprise me if other banks now look at this
issue," said Frank Hirsch, partner at Alston & Bird in Raleigh,
Foreclosures have been spiraling in the United States as
unemployment remains close to 10 percent and U.S. home prices
are hovering near multi-year lows.
JPMorgan's move comes after a Florida law firm earlier this
week said it planned to question the bank about its foreclosure
practices at a hearing next month.
The law firm, Ice Legal, discovered through deposing a bank
executive that she had authorized a foreclosure proceeding
without properly reviewing the right documents.
A JPMorgan spokesman on Wednesday confirmed a report by
Housing Wire, an industry publication that the bank has begun
to systematically re-examine documents filed in current
"We believe the accuracy of the factual loan information
contained in the affidavits was not affected by whether or not
the signer had personal knowledge of the precise details."
The review process should be completed in a few weeks, he
said. The bank will then submit updated affidavits to the
courts as appropriate, he added.
The bank also said it is hiring outside counsel to help it
review its process.
A person familiar with the process said the bank has about
56,000 current foreclosure proceedings that will be affected by
The second-largest U.S. bank by assets, JPMorgan is also
the third largest mortgage servicer, according to data from
Inside Mortgage Finance.
The bank serviced $1.4 trillion in mortgages at the end of
the second quarter, behind Bank of America Corp (BAC.N) --
which serviced over $2 trillion -- and Wells Fargo & Co (WFC.N)
which serviced $1.8 trillion, according to Inside Mortgage
Ally is the fifth largest mortgage servicer, servicing $349
billion in mortgages, according to the publication.
On Monday, Connecticut Attorney General Richard Blumenthal
joined regulators in California, Illinois and Ohio in opening
inquiries into the practices discovered at Ally, once known as
Ally said it addressed errors in processing its
foreclosures months ago and is confident the mistakes did not
wrongly turn people out of their homes. [ID:nN24242956]
JPMorgan shares closed down 1.4 percent at $38.41. Shares
in rivals Wells Fargo and Bank of America were both down 1.2
percent. The broader KBW Banks Index was down just 0.4
(Reporting by Elinor Comlay; Editing by Steve Orlofsky, Leslie