By DAVID STREITFELD

The New York Times

A major title insurance company has stopped insuring homes foreclosed by JPMorgan Chase, another sign that the controversy over the legal practices of the big lenders is starting to influence the housing market. ??The company, Old Republic National Title Insurance, told its agents Friday that it would not write policies on foreclosed Chase properties until ?the objectionable issues have been resolved,? according to a memorandum sent out by the firm?s underwriting department.

A Chase spokesman declined to comment. Old Republic executives did not return calls for comment. The title insurer, which is based in Minneapolis, said earlier in the week that it would not write policies for properties that had been foreclosed by another big lender, GMAC Mortgage. ?As GMAC and Chase try to deal with questions over their legal methods, they have halted all foreclosures in the 23 states where they need a court?s approval. Late Friday, Bank of America said it would stop all its pending foreclosures in those states as well.??GMAC and Bank of America have declined to say how many cases are involved. Chase said it was halting 56,000 cases. About two million households in the country are in foreclosure, and millions more are on the verge.

After a lender seizes a home in a foreclosure case and the defaulting homeowner is, if necessary, evicted, the company works with local real estate agents to prepare the house for sale. The National Association of Realtors said distressed sales, including foreclosures, were 34 percent of all existing home sales in August. In some stricken areas, the percentage is much higher.??When foreclosures are done with faulty documentation, that could leave the new owners of the house vulnerable to claims. Title insurance protects the buyer against defects, errors or omissions in the chain of title.

Old Republic said in the memorandum that its agents were already reporting written cancellations of contracts involving both Chase and GMAC.

Shares of the major title insurance companies dropped on Friday amid concern that their business would suffer as a result of the foreclosure freezes. Fidelity National Financial fell more than 4 percent, while First American Financial dropped 3 percent.??Fidelity National issued a statement saying it did not believe the problems with the foreclosure process would have ?a material adverse impact.?

Mark P. Stopa, a lawyer in Florida who represents defaulting homeowners, said that if more title insurance firms began to shy away from insuring foreclosed properties, the entire housing market could suffer. The prices of foreclosures would plummet, because lenders will not issue a new mortgage without title insurance.???Judges have to force banks to do foreclosures correctly,? Mr. Stopa said. But that would require a significant increase in staff, he said, and ?I?ll believe it when I see it.?