The foreclosure paperwork ""gaffe at GMAC Mortgage"":http://dsnews.comarticles/analysts-weigh-in-on-gmacs-foreclosure-snafu-2010-09-28 has garnered heavy attention from the highest legal counsels in states across the country, and one attorney general is pressing charges.[IMAGE]
In a ""lawsuit filed Wednesday"":http://www.OhioAttorneyGeneral.gov/GMACLawsuit against GMAC Mortgage and its parent, ""Ally Financial Inc."":http://www.gmacfs.com/, Ohio Attorney General Richard Cordray accuses the loan servicer and its agents of filing fraudulent affidavits in an attempt to mislead courts in hundreds of Ohio foreclosures.
""We know that as Ohioans were fighting to save their homes, this loan servicer benefited financially from the dire circumstances,"" Cordray said. ""Instead of stepping up and assisting those at risk of losing their homes, it is clear that GMAC chose to compound the problem through fraudulent and unfair and deceptive practices.""
According to the lawsuit, filed in Lucas County Common Pleas Court, GMAC and its employees committed fraud on Ohio consumers and Ohio courts by signing and filing hundreds of false affidavits in foreclosure cases.
The servicer's mishandlings of foreclosure documents came to light after a GMAC employee testified in a foreclosure case out of Maine that from 2006 to 2010, he signed thousands of affidavits a month without verifying the content.
On September 20th, GMAC suspended foreclosure actions and REO sales ""in 23 states"":http://dsnews.comarticles/paperwork-missteps-expected-to-prolong-foreclosure-crisis-in-certain-states-2010-10-04 to allow the company to undertake a review of what it said was a glitch in its internal procedures. GMAC said it expected any resulting delays on foreclosures already in process to be cleared up within a few weeks, ""without serious consequence.""[COLUMN_BREAK]
According to ""Moody's Investors Service"":http://www.moodys.com, GMAC has already implemented revised affidavit submission procedures and increased staffing levels in its default servicing unit to address the foreclosure operational issues. But the consequences of what went on before are turning extremely serious.
Not only has GMAC's own reputation and integrity taken a huge hit, but a shadow has been cast over the servicing practices of the entire industry. Mortgage investors are already calling for lenders to buy back loans where foreclosure paperwork irregularities may have occurred. Borrowers who've lost their homes are readying to go up against lenders in court.
Attorneys general across the country Ã¢â‚¬" even those in non-judicial foreclosure states Ã¢â‚¬" are calling for statewide foreclosure moratoriums and launching their own probes into certain servicers' businesses. Even ""federal lawmakers are demanding"":http://dsnews.comarticles/index/lawmakers-call-for-federal-foreclosure-investigation-2010-10-05 a full-fledged investigation into what they are calling ""a clear pattern of misconduct on the part of lenders and servicers.""
Ohio's Cordray is asking the court to grant a preliminary and permanent injunction preventing GMAC/Ally from proceeding to foreclose in any pending Ohio case or allowing the property to be sold. Cordray is also asking for civil penalties of up to $25,000 for every violation and for consumer restitution.
GMAC immediately issued a response to Cordray's allegations Wednesday, saying ""there was nothing fraudulent or deceitful"" about its foreclosure practices.
""As previously stated, there have not been any inappropriate foreclosures,"" GMAC stated. ""Typically a foreclosure is not filed until the borrowers are six to 12 months delinquent, and all other alternatives to foreclosure have been pursued. The fact of default and the right to foreclose are not in dispute.""
As a result of similar reports regarding depositions from their internal employees, Cordray has also asked ""JPMorgan Chase"":http://dsnews.comarticles/jpmorgan-halts-foreclosures-robo-signers-appear-commonplace-2010-09-30 and ""Bank of America"":http://dsnews.comarticles/bank-of-america-suspends-foreclosures-in-23-states-2010-10-01 to suspend moving toward a judgment, sale, eviction, or property transfer involving any foreclosure case with affidavits that are in question.
Cordray has ""also sent letters"":http://www.OhioAttorneyGeneral.gov/GMACBankLetters to ""Wells Fargo"":http://www.wellsfargo.com and ""Citibank"":http://www.citigroup.com, requesting that the banks meet with his office to discuss their foreclosure affidavit procedures.