Bank of America has joined GMAC Mortgage and JP Morgan Chase in suspending foreclosure proceedings in 23 states where courts have jurisdiction over foreclosures, to check that it followed correct procedures in filing affidavits.

The latest development in the "robo-signing" controversy follows allegations that workers at GMAC Mortgage and JP Morgan Chase signed court affidavits that contained information they had not personally verified, opening the door to potential legal challenges.

Bank of America has joined GMAC Mortgage and JP Morgan Chase in suspending foreclosure proceedings in 23 states where courts have jurisdiction over foreclosures, to check that it followed correct procedures in filing affidavits.

The latest development in the "robo-signing" controversy follows allegations that workers at GMAC Mortgage and JP Morgan Chase signed court affidavits that contained information they had not personally verified, opening the door to potential legal challenges.

A Bank of America employee acknowledged in a legal deposition taken in February that she signed 7,000 to 8,000 foreclosure documents a month that she typically did not read, the Associated Press reported.

"We have been assessing our existing processes," Bank of America said in a statement. "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 in the 23 states where courts have jurisdiction over foreclosures."

The states are Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.

The Office of Comptroller of the Currency last week ordered the nation’s largest loan servicers to review their foreclosure processes. The OCC directed Bank of America, J.P. Morgan Chase, Citibank, HSBC, PNC Bank, U.S. Bank, Wells Fargo and GMAC Mortgage to verify that they are following proper procedures, and that their practices haven’t harmed borrowers in the past.

Loan servicers have been instructed by mortgage financiers Fannie Mae, Freddie Mac, and their federal regulator, the Federal Housing Finance Agency, to verify that they are processing foreclosures in accordance with their agreements with Fannie and Freddie and all applicable laws and regulations

The "robo-signing" controversy is slowing down the foreclosure process for thousands of homeowners. Some analysts say that could help stabilize prices in markets flooded by foreclosed homes.

But the controversy could also dent sales of distressed properties and bank-owned (also known as real estate owned or REO) homes, if homebuyers fear lawsuits by former owners.

The American Land Title Association said Friday that owners of REO properties and title insurance companies are likely to prevail if issues based on flaws in documentation filed in the foreclosure process are raised after a property changes hands.

It’s "unlikely that a court will take property from an innocent current homeowner and return it to a previous homeowner who failed to make payments on the loan subject to the foreclosure," ALTA said.

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