JPMorgan Chase said yesterday that it was halting 56,000 foreclosures because some of its employees might have improperly prepared the necessary documents, according to an article by David Streitfeld in today's edition of The New York Times.

All of the suspensions are in the 23 states where foreclosures must be approved by a court, including New York, New Jersey, Connecticut, Florida and Illinois.

"The bank, which lends through its Chase Mortgage unit, has begun to 'systematically re-examine' its filings," the article said, "to verify that they meet legal standards, a spokesman, Tom Kelly, said. Last week, GMAC Mortgage said it was suspending an undisclosed number of foreclosures to give it time to take a closer look at its own procedures. GMAC simultaneously began withdrawing affidavits in pending court cases, throwing their future into doubt. Chase and GMAC, in their zeal to process hundreds of thousands of foreclosures as quickly as possible and get those properties on the market, employed people who could sign documents so quickly they popularized a new term for them: 'robo-signer.' In depositions taken by lawyers for embattled homeowners, the robo-signers said they or their team had signed 10,000 or more foreclosure affidavits a month."

"The affidavits in foreclosures," the article continued, "attest that the preparer personally reviewed the files, which those workers acknowledge they had no time to do. GMAC and Chase say that their lapses were technical and will soon be remedied with new filings. But defense lawyers are seizing on these revelations and say they will now work to have their cases thrown out. Beyond the relative handful of foreclosure cases being contested are many more in which the homeowner did not have legal counsel. Potentially, hundreds of thousands of cases could be in doubt."

"The foreclosure process in many states is already torpid. This benefits delinquent homeowners, who can live in their properties free for years, as well as lenders who do not have to write down the value of the original loan. But it also threatens to prolong the housing crisis for many years," the article stated.

In a separate development, a Reuters article today by Lynn Adler said that RealtyTrac said that "Nearly one in every four U.S. homes sold in the second quarter was a deeply discounted foreclosed house, putting the market on pace to work through distressed properties in about three years."

"Banks," it continued, "stepped up foreclosures through the summer and will take over a record 1.2 million homes this year, up from around 1 million last year and about 100,000 in 2005 before the housing bust, according to a forecast from the real estate data company. Foreclosed homes accounted for 24 percent of all second-quarter sales, at an average price discount of more than 26 percent compared with homes not in the foreclosure process. 'This is the kind of volume of activity that we need to see for the market to heal,' RealtyTrac senior vice president Rick Sharga said in an interview. 'Our projections have been that we will get through the distressed inventory largely by the end of 2013, and these kinds of numbers are on target to get us there,' he said."

"New York City homes in foreclosure are selling at as much as 43 percent off of the average sale price, according to a new second-quarter foreclosure sales report by RealtyTrac, released today. But with inventory levels low, foreclosure sales activity in the city is nonetheless defying the upward nationwide trend, with a 10 percent drop from the first quarter of 2010," according to an article today at therealdeal.com by Sarabeth Sanders.