GMAC must explain thousands of potentially illegal foreclosures, says Illinois AG

locks on a foreclosed houseIllinois Attorney General Lisa Madigan is demanding a meeting with mortgage lender Ally after an employee testified the company rubber-stamped thousands of affidavits supporting home foreclosures nationwide.

Madigan sent Ally -- which, despite being rebranded in July, is still commonly referred to as GMAC Mortgage -- a letter insisting on a meeting to address concerns the company violated the state's Consumer Fraud Act by foreclosing on Illinois homeowners after questions were raised about the accuracy of court documents it filed.

An Ally employee testified in a Florida court case that he routinely signed affidavits for foreclosures and submitted them to his corporate attorneys without reviewing homeowners' loan documents, Madigan's office said. These affidavits were then filed as evidence of Ally's right to foreclose.

The employee also testified that he signed at least 10,000 affidavits a month without reviewing the underlying paperwork, and had no way of verifying the information in them.

"Families' homes are at stake here," Madigan said in a statement. "If I determine that Ally is rubber-stamping affidavits and filing them with our courts as evidence, I will take appropriate action. The law demands that lenders prove their case in foreclosure actions, and Illinois homeowners demand the same."

A Bloomberg news report earlier this week said GMAC halted evictions in 23 states, including Illinois, but GMAC insisted its filings contained no false information. An Ally spokeswoman said in an e-mail the "defect" in affidavits used to bolster support evictions was "technical," the news report said.

"The entire situation is unfortunate and regrettable and GMAC Mortgage is diligently working to resolve the situation," the e-mail said. "There was never any intent on the part of GMAC Mortgage to bypass court rules or procedures. Nor do these failures reflect any disrespect for our courts or the judicial processes."

Madigan also requested that Ally immediately provide details on the impact on Illinois homeowners of its conduct, including how many were affected by the suspension of foreclosures; the names of Illinois law firms Ally retains to pursue foreclosures; information about how these firms will implement and monitor the suspension of foreclosure lawsuits in Illinois; and the length of the suspension.

GMAC was founded in 1919 as the General Motors Acceptance Corporation (GMAC) to finance the purchase of automobiles, and ranked fourth among U.S. home mortgage lenders in the first six months of this year, according to Inside Mortgage Finance, an industry newsletter.
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