US banks face foreclosure lawsuits
Sun Oct 3, 2010 6:28AM
Borrowers in six states claim lenders have made errors in foreclosure documentations.
US financial firms face lawsuits and potential fines after major mortgage lenders revealed that they mishandled thousands of home foreclosures.
Mortgage lenders, including the Bank of America, JPMorgan Chase, and GMAC, say they have suspended thousands of foreclosures because of an apparent mishandling of documents.
Borrowers in six states claim that lenders have made errors in foreclosure documentations. Attorney generals are investigating the cases.
Most of the foreclosures are expected to remain in place once the lending institutions re-examine the mounting number of cases - a process which could take years.
The lenders say the suspension will further damage the already fragile US financial market and housing industry.
Foreclosures have increased since the US economic downturn in 2007, leaving many Americans with massive debts.
The number of mortgage defaults has jumped from one percent a year before 2008 to 10 percent today.
According to AFP, figures show that in 2010 more than three million foreclosures are expected to take place in the United States.