Foreclosure Scandal Messing Up Home Sales

Hundreds of thousands of foreclosures have been thrown into limbo in the wake of revelations that major lenders didn’t properly review the foreclosure documents, creating a big mess for people trying to buy those homes, the New York Times reports. JPMorgan and GMAC have suspended foreclosures in the 23 states where court approval is required for foreclosures, and Bank of America today instituted a nationwide moratorium, according to the Wall Street Journal. All have forbidden Fannie Mae and Freddie Mac from selling homes linked to their loans.

“I gave up my rental thinking I would have a house,” complains one woman who’d agreed to buy a foreclosed property. “Now I’m sharing a room with my son. What the hell is up with that?” Distressed properties account for about a third of all home sales, which were already at startling lows this summer. “If this wipes out half my inventory, that’s a scary thing,” says one real estate agency executive. (More real estate stories.)