It had been widely speculated that Ally Financial Inc.’s GMAC Mortgage was instructing its reps to stop foreclosures on homeowners in 23 states. According to a memo obtained by Bloomberg News, GMAC Mortgage may “need to take corrective action in connection with some foreclosures.” In the end, it was all rumor as GMAC cleared the air late yesterday issuing a statement noting that "This is not true. In fact, all new residential foreclosures are continuing in the ordinary course of business with no interruption in our usual practice."
The contents of the memo obtained by Bloomberg were confirmed by James Olecki, spokesman for Ally Financial. It was also rumored that GMAC was upholding sales of homes in which it had already foreclosed upon.
"The speculation likely emanates from a direction previously given by GMAC Mortgage to certain of its outsource vendors to allow time to address a potential issue that was raised in a number of existing foreclosures challenging the internal procedure we used for executing one or more judicially required forms," said the statement issued by Ally Mac late Monday. "This direction was to suspend evictions and REO closings where the related foreclosure could have been impacted by the same internal procedure. We are also reviewing certain previously completed foreclosures where the same procedure may have been used."
GMAC Mortgage ranked fourth among U.S. originators in the first six months of 2010, with $26 billion in mortgages. Wells Fargo was tops in originations with $160 billion, and Citigroup came in at fifth with $25 billion in mortgage-related assets.
The statement continued, "We are unable to comment on the specific merits of the challenge because some of them are in litigation. Nevertheless, a new process has already been developed and implemented so that though some existing foreclosures may experience delays while corrective action is taken, there will be no interruption in new foreclosures. These delays are expected to be resolved within the next few weeks and certainly before year end, without serious consequence. GMAC Mortgage has been addressing the procedural challenge for more than three months. In all other respects, the mortgage business is operating as usual."
