Monday, September 20, 2010

HOT: Ally's GMAC Mortgage Halts Home Foreclosures in 23 States

This is going to be a mess for anyone holding mortgage paper.

Ally Financial Inc.’s GMAC Mortgage unit told brokers and agents to halt foreclosures on homeowners in 23 states including Florida, Connecticut and New York.

GMAC Mortgage may “need to take corrective action in connection with some foreclosures” in the affected states, according to a two-page memo dated Sept. 17 and obtained by Bloomberg News. Ally Financial spokesman James Olecki confirmed the contents of the memo. Brokers were told to stop evictions, cash-for-key transactions and lockouts, regardless of occupant type, with immediate effect, according to the document, addressed to GMAC preferred agents.

The company will also suspend sales of properties on which it has already foreclosed. The letter tells brokers to notify buyers that the company will extend the closing date on all sales by 30 days. Buyers will be able to cancel their agreement to purchase and get their deposit back, according to the letter.

The action by GMAC appears to be the result of questions throughout the industry as to whether proper documentation exists to proceed on many foreclosures. In many cases, it may be the case that no documentation exists.

Bottom line: If you are in foreclosure, or heading that way, congratulations. You may have just won the paperwork roulette. The banks may not have copies of all those forms you signed, or, at closing, they may have  not had you sign enough forms. Thus, technically, it may not be possible for bankers to throw you out of your house. It's going to be interesting to see how the banking elite deal with this.

According to Bloomberg, these are the states affected by the GMAC:












New Jersey

New Mexico

New York

North Carolina

North Dakota




South Carolina

South Dakota



1 comment:

  1. Is there any indication that the "lack of paperwork" is the result of the bank not actually owning the mortgages, or lacking the paperwork to prove its right to enforce the mortgage, because of all the securitizations when mortgages were broken up and sold in hundreds of pieces?

    I had heard that the above arguments were being raised in lower courts.