Turn On The Lights, Watch The Roaches Scatter, Part 2

Early last week I told you how GMAC was halting its foreclosures in several states because of (to put it mildly) possible fraud on the part of GMAC. Now JP Morgan Chase is looking into its foreclosures and things are beginning to get very interesting.

The review could affect at least 56,000 foreclosures. JPMorgan Chase is the third largest mortgage servicer in the nation, with $1.35 trillion in business and a 12.6 percent market share, according to Inside Mortgage Finance.

"It has come to our attention that in some cases employees in our mortgage foreclosure operations may have signed affidavits about loan documents on the basis of file reviews done by other personnel—without the signer personally having reviewed those loan files," says JPMorgan spokesman Tom Kelly.

In the meantime, the company has requested that the courts not enter judgments in pending matters until the review is complete, a process they say should take a couple weeks.

"We believe the accuracy of the factual loan information contained in the affidavits was not affected by whether or not the signer had personal knowledge of the precise details," Kelly adds.

That is leading to a very interesting prediction by the Zero hedge crew:

We predict that within a week, all banks will halt every foreclosure currently in process. Within a month, all foreclosures executed within the past 2-3 years will be retried, and millions of existing home sales will be put in jeopardy.

That would pretty much be the end of the housing market in the US overnight, and quite possibly the catalyst that kicks us into the next disastrous downward phase in the economy, as in meltdown, crisis, yadda yadda and all right before the midterm elections.

For once I'm hoping Tyler's wrong.  Really, really wrong.  Because if he's right, October is going to be a bloodbath.  Putting this one in the Future Stupidity file and I'll check it again before Halloween.