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Ohio sues Ally Financial alleging fraud in foreclosures

Ohio state attorney general Richard Cordray is suing Ally Financial and its GMAC mortgage unit, alleging fraud in foreclosures across the state in what could be the first in a wave of lawsuits against the nation's largest lenders.

Cordray said the alleged fraud was the "tip of an iceberg of industrywide abuse of the foreclosure process" and is asking for civil penalties of up to $25,000 for every violation of consumer laws and for Ally to pay back losses to homeowners.

He has called for courts to freeze Ally foreclosures.

GMAC said in a statement Wednesday that it believes "there was nothing fraudulent or deceitful about its foreclosure practices" and that it "expects to be fully vindicated by the Ohio courts."

"If procedural mistakes were made in the completion of certain legal documents, GMAC Mortgage reacted proactively to the issue and immediately undertook steps to remedy the situation," the company said. "As previously stated, there have not been any inappropriate foreclosures."

By Ariana Eunjung Cha  | October 6, 2010; 9:01 PM ET
Categories:  Housing  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Wells Fargo will spend $772M modifying loans
Next: Economic agenda: Thursday, Oct. 7, 2010


Vindicated? Yeah. If Taft-R was still Governor. ... Maybe. 'Coin gate' and "other issues" much?

Posted by: Anonymous | October 6, 2010 10:14 PM | Report abuse

"Tip of an iceberg" has to be the biggest understatement of all time. Massive criminal fraud by all the major banks would be more like it. Let the lawsuits begin.

Posted by: Desertdiva1 | October 6, 2010 11:21 PM | Report abuse

GMAC's "procedural" mistakes, and those of their servicer, Nationstar, added up to $168,000 in violations for me! It took over 2 years of litigation for them to give me the modification I applied for in the first place. Oh, and let's not forget the illegal foreclosure attempt that the Attorney General stopped, prior to initiating litigation. Or the $3000 in taxes that they paid to the wrong account, causing my house to get sold for back taxes, and then they charged me for the redemption, the wrong taxes, and, oh, doubled my escrow payment. Yeah, I'd say 2 years of litigation was a "proactive" step to remedy the situation.

Posted by: vffwv | October 7, 2010 7:01 AM | Report abuse

Now that the Supreme Court has ruled that bribery is "free speech," a trillion dollars in campaign contributions to select politicians ought to fix this problem.

Posted by: Anonymous | October 7, 2010 8:27 AM | Report abuse

Stick it in their eye Ohio. I'm moving - go Browns!!!

Posted by: DontGetIt | October 7, 2010 8:37 AM | Report abuse

Here's how the States can claw back the obscene bank profits, and get themselves solvent again.

Posted by: Anonymous | October 7, 2010 9:58 AM | Report abuse

Fines are fine but a long stretch in the joint for the guilty parties sends a stronger message.

And what ever happened to the "too big to fail, too big to exist" idea?

Posted by: Anonymous | October 7, 2010 10:10 AM | Report abuse

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