(NATIONAL) — The scope of what is being called in some circles “Foreclosuregate” keeps expanding and lenders and loan servicers including JPMorgan Chase and Ally Financial are facing an explosion in homeowner lawsuits and state attorney general investigations over claims of falsified mortgage documents, according to a report by Bloomberg Buisnessweek.

In addition lawmakers in both houses of Congress have called for investigations

Adding to the mess is that “procedural mistakes” in the handling of mortgage documents have clouded titles establishing ownership of the homes, a problem that could plague both buyers and sellers of those homes for years.

In December 2009, a GMAC employee said in a deposition that a team of 13 people signed about 10,000 documents a month without verifying their accuracy.

In lawsuits across the country, homeowners claim lenders and servicers have used falsified documents to foreclose on homes, sometimes when the banks didn’t even hold titles to the properties.

THE MERS PROBLEM

The Mortgage Electronic Registration Systems (MERS) based in Reston, Virginia faces its own mounting legal challenges.

MERS was created by the mortgage banking industry to handle “mortgage transfers” between member banks but a lawsuit filed on Sept. 28 in federal court in Louisville on behalf of all Kentucky homeowners claims that MERS was much more than “transfer” house. It claims MERS was part of a conspiracy to create false promissory notes, affidavits, and mortgage assignments to be used in illegal mortgage foreclosures.

Similar class actions have been filed on behalf of homeowners in Florida and New York.

Adding to the confusion and complexity of the case is that title insurers may also end up in court bringing and defending lawsuits because they could be held responsible if foreclosures are reopened.

In that case, title insurers might be going after the banks or whoever assured them there was a clear title.

And individuals who purchased homes in foreclosure sales face their own worries, as paperwork errors raise questions about the validity of the titles needed to prove ownership.

The problem? Defective documentation has created millions of “blighted titles” that may plague the nation for the next decade, according to one attorney, Richard Kessler of Sarasota, Fla., who conducted a study that he says found errors in about three-fourths of court filings related to home repossessions.

WHO REALLY DOES OWN THAT HOUSE?