Bank of America is latest to put hold on foreclosures

Bank of America, the nation’s largest bank, yesterday became the latest lender to put foreclosures on hold in 23 states because of concerns that came to light in a Massachusetts case that court documents the bank submitted were improperly prepared.

Bank of America and other mortgage companies have been under pressure to review their paperwork after employees and contractors said in sworn depositions that because of the enormous volume, they had not had the time to read the documents or check them for accuracy.

“To be certain affidavits have followed the correct procedures, Bank of America will delay the process in order to amend all affidavits in foreclosure cases that have not yet gone to judgment,’’ spokesman Dan Frahm said in a statement.

A Bank of America executive, Renee Hertzler, said in a February deposition in Massachusetts that she signed as many as 8,000 foreclosure documents a month without reviewing them. The deposition is similar to others taken from document processors at J.P. Morgan Chase and Ally Financial, which have also frozen foreclosures in the past week. The statements were taken by lawyers for homeowners contesting the seizure of their homes.

On Wall Street, the stocks of companies that insure titles for homes were battered on fears of the worst-case scenario: that flawed paperwork could be used by those who have been evicted to reclaim resold properties. At least one such company, Old Republic Title, has stopped insuring homes that were foreclosed on by Ally Financial or its GMAC mortgage unit.

Federal and state law enforcement officials have stepped up their scrutiny of foreclosure practices. Connecticut’s attorney general, Richard Blumenthal, announced a moratorium on foreclosures by all banks in the state, the first jurisdiction to take such wide-ranging action.

Blumenthal called the actions of J.P. Morgan and Ally a “possible fraud on the court undermining the integrity of the legal process and consumers’ ability to fight foreclosures.’’ He added, “This freeze should stop a foreclosure steamroller based on defective documents and enable effective remedies.’’

California broadened its moratorium on foreclosures by Ally Financial to include those by J.P. Morgan Chase. Calling the companies’ review of key foreclosure documents a “ruse,’’ Attorney General Jerry Brown ordered J.P. Morgan to prove it is following the law before it resumes foreclosures in the state.

The 23 states where Bank of America, J.P. Morgan, and Ally suspended foreclosures require a court order before a home can be seized. This approach is considered favorable for homeowners because mortgage companies must submit more extensive documentation before they can foreclose. Massachusetts is not on that list but Connecticut is.

At the federal level, officials in the agencies responsible for policing banks and the home loan market said they were disturbed by the use of “robo-signers’’ at mortgage companies.

The Federal Housing Finance Agency, which oversees mortgage finance giants Fannie Mae and Freddie Mac, said it had asked the companies to work to make sure the loan servicer companies they contract with to manage their loans are complying with the law. Fannie and Freddie both use Ally and J.P. Morgan to service some loans.

Fannie and Freddie own or guarantee more than half of the $11 trillion mortgage market.

Over the past week, the Treasury Department ordered some of the largest banks to review their foreclosure procedures.

Some judges have reprimanded banks that submit faulty documents. In Maine last week, a state judge vacated his own decision to allow GMAC to foreclose on a house after learning that an employee wasn’t reading the legal documents