When the country was hit by the economic crisis, the real estate market was hit the hardest. Even now, when the economy is already starting to stabilize, the real estate market is still struggling to keep its grounding – aside from the declining prices, the mounting number of foreclosed homes is proof of this. It is then no wonder that more and more homeowners and lawmakers are clamoring for banks and mortgage servicing companies to stop foreclosures and review their current processes.

The push to freeze foreclosures came when Ally (formerly GMAC Bank), JPMorgan, and Bank of America all admitted that some employees have signed off on some foreclosure affidavits without checking on the accuracy of legal documents. The process – which has come to be known as “robo-signing” – has led these three banks to put foreclosure proceedings to a pause while they review the processes, ensuring the documents submitted were correct. Stoppage happened in only 23 U.S. states but foreclosures were still a go in the remaining 27 states, like California and Texas – which is why pressure to stop foreclosures has been coming from these two states.

Members of Congress from California, on Tuesday, requested the heads of Justice Department, the Federal Reserve, and the Comptroller of the Currency to investigate banks’ foreclosure processes for “possible violations of law or regulations”. Suspension notices, which ask that foreclosures be put to a standstill until review of procedures, were sent out by the Texas Attorney General’s office to 30 loan servicers within the state.


Senator Robert Menendez, D-N.J. has also made his move: he has written the chief executives of the three banks and 117 more mortgage servicing companies and requested them for the details of their internal investigations. Together with Senator Al Franken, D-Minn., Menendez also asked the Government Accountability Office to check whether the current anomaly could have been brought about by a federal oversight.

“It is simply inexcusable that proper oversight proceedings were not in place, especially when dealing with matters as monumental as the seizure of a family’s home,” says Menendez who is also chairman of the Senate subcommittee on housing, transportation and community development.

JPMorgan declined to comment on the letter, while Bank of America has not provided an immediate response. Ally, on the other hand, says they are investigating on the matter already and will do everything to resolve the issue.

Wells Fargo and Citigroup, two other major financial institutions, are yet to put a stop to the ongoing foreclosures.