Connecticut halts all foreclosures for all banks



(Photo Credit: Jessica Hill/AP)

Connecticut Attorney General Richard Blumenthal on Friday ordered a moratorium on all foreclosures by all banks for 60 days--the most radical action taken by a state on issue of document irregularities.

California also expanded the moratorium on foreclosures it announced last week on Ally Financial foreclosures to include those by J.P. Morgan Chase.

Calling the companies' review of key foreclosure documents "a ruse," California Attorney General Jerry Brown (D) ordered J.P. Morgan to prove it is following the law before it continues foreclosures in the state.

Both J.P. Morgan Chase and Ally have frozen foreclosures in 23 states because some employees had signed off on foreclosure paperwork without properly reviewing the files.





Colorado and Illinois have stopped foreclosures by Ally and at least seven other states have launched probes into the issue. But Connecticut is the first to institute an industry-wide ban.

in Connecticut, Blumenthal said in a statement that he is investigating J.P. Morgan Chase and Ally, formerly GMAC, which is the recipient of a $17 billion federal bailout and majority-owned by the U.S. Treasury, as well as other lenders.

He said the actions of J.P. Morgan and Ally are a "possible fraud on the court undermining the integrity of the legal process and consumers' ability to fight foreclosures.

"This freeze should stop a foreclosure steamroller based on defective documents and enable effective remedies," Blumenthal said.

Ally Financial had already voluntarily suspended evictions and resales of homes in 23 states that require a court order for foreclosures. J.P. Morgan's actions were a bit broader--the bank suspended all foreclosures in the same 23 states. Connecticut was on the original list of 23 but California was not.

Both Blumenthal and Brown are running in high-profile races for higher office in their respective states in the Nov. 2 election -- Blumenthal for U.S. Senate, and Brown for governor.

Complete coverage in The Washington Post:

Sept. 20: Ally suspends evictions on foreclosed homes in 23 states

Sept. 21: A single Ally employee, Jeffrey Stephan, signed over 10,000 documents a month without reading them

Sept. 22: Fake documents, forged signatures plague foreclosure system

Graphic: 'Robo-signer' Linda Green's changing signature

Who is Jeffrey Stephan anyway?

Sept. 23: Mortgage documentation problems could affect other states not included in Ally's 23-state moratorium

Sept. 24: Lawmakers question Fannie on 'foreclosure mills'

Document: Letter from Congressmen to Fannie Mae CEO

User poll: What should happen to foreclosure documents approved by "robo-signers?"

Sept. 28: Luis Fernandez's foreclosure documents never looked quite right

Sept. 29: As J.P. Morgan Chase freezes foreclosures, pressure on the rest of the industry

Sept. 30: OneWest Bank employee: 'Not more than 30 seconds' to sign each foreclosure document

Sept. 30: U.S. regulators order Bank of America, Citibank, HSBC, PNC Bank, U.S. Bank and Wells Fargo to review procedures