California law prohibits lenders from recording notices of default on mortgages made between January 1, 2003 and December 31, 2007, unless, the lender contacts or tries diligently to contact the borrower to determine eligibility for a loan modification. A notice of default must include a declaration of compliance with California law.
JP Morgan Chase, the nation's third largest loan servicer, has admitted that employees signed affidavits in 56,000 foreclosure cases nationwide without first personally reviewing the contents of the borrowers' loan files. As a result, those borrowers lost their homes based on affidavits the bank never confirmed were accurate.
JP Morgan has suspended foreclosures in 23 other states that, unlike California, require a court order for foreclosures.
On Sept. 24, Brown sent a similar letter to Ally Financial, Inc., formerly known as GMAC, directing it to prove it is complying with California law or cease foreclosures in California until it can.