GMAC Denies Halting Foreclosures in 23 States

By:
Peter King | September 21, 2010

GMAC Mortgage is denying a report that it has suspended foreclosures in 23 states, saying all new foreclosures are continuing as usual. 

The announcement this afternoon came in response to a Bloomberg report this morning that the company had directed its agents and brokers to immediately cease repossessions in the affected states and that the company was suspending foreclosure sales on properties already in its possession.
 
Bloomberg cited a Sept. 17 memo it had obtained and said it had confirmed its contents through a spokesman for Ally Financial, the lender’s parent company formerly known as GMAC Inc.
 
The GMAC statement said the story probably grew out of a directive to suspend certain foreclosures and evictions where there might be a problem with the way the company met certain legal requirements. The company reported that “all new residential foreclosures are continuing in the ordinary course of business with no interruption in our usual practice.”
 
There has been a number of reports from other media outlets that the suspensions may relate to how GMAC documented ownership of the mortgage note in foreclosure claims in some states. The Associated Press reports that Jeffrey Stephan, a GMAC employee, testified in December that he routinely signed 10,000 such affidavits or claims a month without verifying who actually owned the mortgage.
 
An examination of the states listed in the Bloomberg report by the Naked Capitalism blog found that 22 of the 23 are judicial foreclosure states, which require such affidavits in order to bypass lengthy judicial hearings. In addition, the Bloomberg list covers all but one of the nation’s judicial foreclosure states.
 
Regardless of whatever procedure GMAC is alluding to in its statement, the question of proving ownership of a mortgage in foreclosure cases has been a growing issue. In August, a judge in Duval County, Fla. ruled that JP Morgan Chase could not foreclose on two homeowners because Fannie Mae held the note, and not JP Morgan Chase, as the bank had affirmed.
 
The Florida attorney general is presently investigating three law firms for providing fraudulent affidavits of mortgage ownership, two of which have represented GMAC in foreclosure proceedings. U.S. Rep. Alan Grayson (D-Fla. 8th), cited the cases in a letter today asking the Florida Supreme Court Chief Justice Charles Canady to suspend all mortgages until the investigation is completed.

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