Allyâ?Ts GMAC Mortgage Halts Evictions Across 23 States
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Ally’s GMAC Mortgage Halts Evictions Across 23 States
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A By Denise Pellegrini and Dakin Campbell
Sept. 20 (Bloomberg) — Ally Financial Inc.’s GMAC Mortgage
unit told brokers and agents to halt evictions tied to foreclosures on
homeowners in 23 states including Florida, Connecticut and New York.
GMAC Mortgage may “need to take corrective action in
connection with some foreclosures” in the affected states, according to a
two-page memo dated Sept. 17 marked “urgent.” Ally Financial spokesman James
Olecki confirmed the contents of the memo. Brokers were told to immediately
stop evictions, cash- for-key transactions and lockouts, according to the
document, addressed to GMAC preferred agents.
The suspensions will “allow time to address a potential
issue that was raised in a number of existing foreclosures challenging the
internal procedure we used for executing one or more judicially required
forms,” Ally spokeswoman Gina Proia said today in an e-mailed statement.
Foreclosures won’t be suspended and will continue with “no interruption,” she
Lenders and lawmakers have been trying to slow foreclosures
and keep people in their homes as U.S. seizures set records. Bank repossessions
climbed 25 percent in August from a year earlier to 95,364, according to
RealtyTrac Inc., the Irvine, California-based data provider. Detroit-based
Ally, the auto and home lender formerly known as GMAC Inc., is 56.3 percent
owned by the U.S. after more than $17 billion of taxpayer bailouts.
Working on Issue
The company has been working on the issue for “more than
three months” and expects it to be resolved “within the next few weeks,” Proia
said. She declined to provide further details, saying some of the cases are in
Suspensions will occur “where the related foreclosure could
have been impacted by the same internal procedure. We are also reviewing
certain previously completed foreclosures where the same procedure may have
been used,” Proia said.
The lender will suspend sales of bank-owned properties and
extend closings 30 days. Buyers will be able to cancel their agreement to
purchase and get their deposit back, according to the memo.
Barclays Capital analysts told clients in a note today the
action may involve issues with officials in so-called judicial states where
lenders must appear before a judge before starting foreclosure proceedings. Of
the 23 states listed in the memo, all except North Carolina are judicial
states, and the only judicial state not on the list is Delaware, the analysts
led by Jasraj Vaidya wrote.
“This would hint at some potential issues with judicial
states,” the analysts wrote. The moratorium may be an attempt “to ensure that
the process does not have significant flaws that can leave it open to legal
action in the future,” they said.
There is no public enforcement action pending against GMAC
in North Carolina, Ha Nguyen, a spokeswoman for the state’s bank commissioner,
Florida Attorney General William McCollum in August
announced an investigation into three law firms that represent loan servicers
in foreclosures. McCollum issued subpoenas to the firms, which are alleged to
have submitted fraudulent documents to the courts in “numerous occasions” or
failed to submit documents at all, according to an Aug. 10 statement from
“Thousands of final judgments of foreclosure against Florida
homeowners may have been the result of the allegedly improper actions of the
law firms under investigation,” the statement said.
GMAC Mortgage ranked fourth among U.S. home-loan originators
in the first six months of this year, with $26 billion of mortgages, according
to Inside Mortgage Finance, an industry newsletter. Wells Fargo & Co.
ranked first, with $160 billion, and Citigroup Inc. was fifth, with $25
Ally’s 8 percent notes maturing in 2031 rose $4.13, or 4
percent, today to 108.5 cents on the dollar to yield 7.21 percent, according to
the Trace bond-price reporting system.
Following is a table of the affected states.
To contact the reporters on this story: Denise Pellegrini in
New York at email@example.com; Dakin Campbell in San Francisco at
To contact the editor responsible for this story: Edward
Evans at firstname.lastname@example.org; Alec McCabe at email@example.com.
Last Updated: September 20, 2010 15:49 EDT
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