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The halt of these foreclosures is only applicable in those states that require a court hearing before being allowed to move forward. Bank of America isn't the only one that's under scrutiny. At least two more banks, including GMAC and JPMorgan, announced they would be stopping all proceedings, as well as evictions, until each can review its own respective process and affidavits. For JPMorgan, this means more than 56,000 foreclosures have suddenly come to a stop and for now, at least some families are feeling as though they might be able to make an eleventh hour save.
California has already issued a moratorium on foreclosures by two lenders, GMAC and Ally Financial. In recent days, however, it's expanded the moratorium to now include JPMorgan. Connecticut has taken it a step further and has ordered all lenders licensed to operate in its state a 60 day moratorium on all foreclosures and by all banks. It cited ''potential problems with documentation''. After these announcements began trickling down this past week, Colorado and Illinoi both stepped up and followed suit and now seven more states, as of late Friday, are now considering their own options.
The housing recovery is struggling and the sudden halt of so many foreclosures might just be the final nail in the coffin for at least a few banks. Lawyers across the nation are predicting lawsuits. Laurie Maggiano, with the Treasury Department's Homeownership Preservation Office, says the pace of foreclosures throughout the industry will likely be affected, including downgrades on agency ratings, which can have a significant impact on stocks. Worse case scenario, many lawyers and economists are saying this latest scandal will result in tens of thousands of homeowners who, by all rights, would be in foreclosure, but through a twist of fate, will remain in their homes at no cost to them. It might also mean a second chance for those homeowners who are ''this close'' to finally digging out of the residual of the recession the opportunity of staying in their homes.
Time will tell if this latest legal quagmire will work to the advantage of the homeowner or in fact will better protect the lenders; however, there is a significant absence of anyone taking responsibility, and instead, most are too busy placing blame.
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