Amidst a housing crisis, things might get even worse. Last week, Ohio Attorney General Richard Cordray sued the mortgage company Ally over allegations of improper handling of eviction paperwork.

The allegations stem from accusations of managers not reviewing the paperwork before submitting it to the judge. In 23 states, foreclosure documents must be approved by a judge before the bank can proceed with foreclosure proceedings. As part of the process, the bank is required to review all information in the foreclosure paperwork to assure accuracy and sign a sworn statement that they reviewed all the documents and the information is correct.

Attorney General Richard Cordray’s accusation is the banks did not properly review those documents. According to reports, the people at the bank responsible for reviewing the court documents signed about 10,000 per month.

40 states have said they would deeply investigate the paperwork to make sure all proper procedures were followed. US Attorney General Eric Holder has also pledged to look into the alleged wrong-doings by the financial institutions. Connecticut Senator Chris Dodd, Chairman of the Senate Banking Committee said he would hold hearings on the issue sometime next month.

Taking a precautionary measure, Bank of America has decided to hold off on all foreclosures until internal and government audits are complete. JPMorgan Chase & Co, PNC Financial and Ally Bank’s GMAC division have halted foreclosures in the 23 states where judicial approval is needed for foreclosures.

The Obama administration is said to be holding meetings with the Department of Housing and Urban Development, the Department of the Treasury and other entities, although the substance of the discussions is not known.