It has been the biggest — and perhaps murkiest — legal story of the last two weeks: At least four major lenders have halted foreclosures, citing the need to review whether their mortgage documentation is in order and in compliance with court rules in the 23 states that require court approval before a foreclosure can take place. Bank of America, the largest U.S. bank, announced Friday that it was halting foreclosures on homes in all 50 states.
The decisions by the lenders — JPMorgan Chase, BofA, Ally Financial Inc. and PNC Financial Services — have spotlighted tiny law firms that act as so-called “foreclosure mills” and the practice among lenders of hiring “robo-signers,” people who sign tens of thousands of documents per month, according to The Wall Street Journal and The Washington Post.
