Illinois investigates GMAC foreclosures
Attorneys general in Texas, Iowa and Illinois, following Florida, have started investigations into mortgage practices at Ally Financial Inc.'s GMAC unit while California has ordered the company to prove its foreclosures are legal or halt them.
California Attorney General Jerry Brown said Sept. 24 in a statement that he is "demanding that Ally Financial, the fourth largest home loan institution in the country, demonstrate its compliance with California law or else halt all foreclosure operations in the state."
Iowa, which leads an 11-state working group of attorneys general and bank examiners exploring ways to prevent foreclosures, opened an inquiry Sept. 23.
"The integrity of the foreclosure process is of utmost importance and we are very concerned by the issues that have been raised regarding Ally Financial's treatment of affidavits," Iowa Assistant Attorney General Patrick Madigan said.
Texas Attorney General Greg Abbott opened an investigation "early this month," said Tom Kelley, a spokesman for the office. Illinois Attorney General Lisa Madigan asked for a meeting with the company and requested information about how homeowners in the state have been affected, according to a statement.
The action by officials in the four states follows an announcement by Florida Attorney General William McCollum, who last month said he was investigating three Florida law firms handling foreclosures.
Florida investigators issued subpoenas in the case to the Law Offices of Marshall C. Watson PA; Shapiro & Fishman LLP; and the Law Offices of David J. Stern PA, according to a news release posted on the attorney general's website.
The law firms were hired by loan servicers to begin foreclosure proceedings when consumers were behind on their mortgages, according to McCollum's office.
Homeowners facing eviction have accused the companies of filing foreclosure actions without verifying that borrowers actually defaulted or who owns the loans.
GMAC Mortgage notified agents and brokers on Sept. 17 that it had suspended evictions in 23 states. Last week, Ally, the Detroit-based auto and home lender, said it found a "technical" deficiency in its foreclosure process allowing employees to sign documents without a notary present or with information they didn't personally know was true.
GMAC said Friday in a statement that the problem was identified and then corrected "a few months ago." The defects didn't occur in all foreclosure cases in the 23 affected states, according to the statement. Ally said it has issued a "more robust policy" on processing foreclosures, increased staff to handle documents and instituted more training for employees.