Connecticut orders Ally Financial to freeze foreclosures
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.
More coverage in The Washington Post:
Sept. 21: A single Ally employee, Jeffrey Stephan, signed over 10,000 documents a month without reading them.
Ariana Eunjung Cha
| September 27, 2010; 12:44 PM ET
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