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Connecticut orders Ally Financial to freeze foreclosures

blumenthal.JPG

Connecticut AG Richard Blumenthal, left, on the campaign trail with former President Bill Clinton. Blumenthal is running as a Democratic for a U.S. Senate seat.

(Photo Credit: Jessica Hill/AP)

Connecticut ordered Ally Financial's GMAC unit to freeze all foreclosures in the state, joining the growing list of states probing the company's mortgage practices.

Iowa, Illinois and Texas have opened investigations. California's attorney general on Friday demanded a stop to all GMAC foreclosures if the company could not "immediately prove" it was complying with the law.

Connecticut Attorney General Richard Blumenthal accused GMAC--the nation's fourth-largest mortgage lender and which is majority-owned by the U.S. government--of using "defective foreclosure documents" in its filings. He said he ordered the moratorium on foreclosures "to forestall horrendous, illegal harm against homeowners."

GMAC suspended evictions and sales of repossessed homes on Sept. 17 but said it was continuing to proceed as normal in initiating new foreclosures.

"The GMAC/Ally foreclosure steamroller should be stopped so the company can be held accountable," Blumenthal said in a statement.

Ally spokesman James Olecki declined to comment on the pending litigation.

Connecticut AG letter.

More coverage in The Washington Post:
Sept. 21: A single Ally employee, Jeffrey Stephan, signed over 10,000 documents a month without reading them.

By Ariana Eunjung Cha  | September 27, 2010; 12:44 PM ET
 
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Ally's 'bankers as cheaters' commercials pulled as document investigations continue
Next: Ally disputes charges that another GMAC employee 'fabricated and changed title' in foreclosure cases

Comments

Will this moratorium apply only to mortgages owned by Ally or to others in which Ally was the servicing agent? If the latter, this could be a very big story.

Posted by: Anonymous | September 27, 2010 2:41 PM | Report abuse

the head guy is the president...
he should be held accountable...

Posted by: DwightCollins | September 27, 2010 2:42 PM | Report abuse

How's this for hopey changey?

Posted by: Anonymous | September 27, 2010 3:39 PM | Report abuse

Trust the markets!

Yeah, sure! Like trusting Bernie Madoff.

Posted by: Garak | September 27, 2010 4:47 PM | Report abuse

I do not see why bloggers here are so upset. Obama will wink to Bernanke who will then print a few trillion and sneak it under the table to GMAC. So convenient that the fed is private and does not have to open its books. Why worry about inflation tomorrow when you can have a hamburger today.

Posted by: gvelanis | September 27, 2010 7:01 PM | Report abuse


The problem here is that there aren't enough people on staff to do this the right way.

Since the company is majority-owned by the taxpayers/government, simple hiring actions or "personnel redistributions" from the Federal regulatory agencies to the Ally offices should solve the problem.

But this cannot be allowed to halt the progress of the foreclosures. That needs to happen before the market can correct fully. This is the "shadow inventory", the "toxic assets" that need to be cleared off of the books before anyone can make true evaluations.

Posted by: thardman | September 27, 2010 8:30 PM | Report abuse

Other states should do the same and expand the investigations to Ocwen in Florida.

Posted by: francagargiulo | September 27, 2010 8:52 PM | Report abuse

Would someone (maybe even the reporter on the story) summarize the particular step(s) in the foreclosure process that is under legal challenge? What IS a `defective foreclosure document?'

Posted by: Anonymous | September 27, 2010 8:56 PM | Report abuse

Didn't pay your mortgage? Tough beans- Move on and start over. If an error occurs, compensation is in order.

Some of these folks haven't made a payment in two years. If they are "stuck on stupid" and bought too much house, move on with your lives.

All these people are doing is screwing with the inevitable and making new loan applicants pay more, for their irresponsibile acts. Yes, I keep two years of savings, in the event I am laid-off.

Posted by: Steve M. | September 27, 2010 9:23 PM | Report abuse

As I recall from a previous article, the guy who approves these documents is supposed to review them for accuracy as required by law. Under oath, he admitted that, in a large number of cases, he just signed the document packets without reviewing the documents.

In any case, somebody needs to start reviewing the foreclosures in question. However, that should not stop new foreclosures from going forward, assuming that Ally can show that they have corrected the underlying problem.

Posted by: Anonymous | September 27, 2010 9:29 PM | Report abuse

Best place to find quality quality bankruptcy info online is http://bit.ly/avB0jI

Posted by: kerisable28 | September 28, 2010 5:01 AM | Report abuse

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