Is GMAC The First Of Many?
Everyone has probably heard of the fiasco that GMAC has created for them by rubber stamping affidavits that has allowed/allows them to foreclose on properties. During a deposition, one of the signers admitted under oath that he was not personally familiar with what he signed when completing affidavits. As a result, there has been some indication that GMAC was halting all evictions and post foreclosure closings. GMAC is now saying that they addressed these problems months ago and that people weren’t wronged. Despite their claim, GMAC is now the target of state sponsored investigations into their lax practices.
UPDATE 2-GMAC says foreclosure errors addressed months ago
(Reuters) – GMAC Mortgage, one of the largest servicers of U.S. residential loans, on Friday said that its errors in processing foreclosures were addressed months ago, and that it was confident the mistakes did not wrongly turn people out of their homes.
It is the latest word from the Ally Financial unit that has received a firestorm of criticism in the last week as shoddy foreclosure practices came to light. Its errors have raised concerns of an industrywide problem, given the volume of foreclosures that have been completed in recent years.
GMAC earlier this week said it discovered employees submitted affidavits containing information they did not personally verify, casting doubt over how much care was taken in dealing with the highly sensitive U.S. housing issue. The errors also applied to requirements that documents be signed in the presence of a public notary.
The company said it has suspended evictions and post-foreclosure closings in 23 states. It has not halted foreclosure proceedings, it said.
“We believe the defects occurred in some, but not all foreclosures in the 23 impacted states,” GMAC said in a statement. “The problem was identified and then addressed a few months ago, and the execution process has been corrected.”
Among changes, GMAC has sent employees with signing responsibility through additional training, issued a more robust policy on requirements and boosted the number of people performing the processes.
But the company now faces new challenges.
Illinois Attorney General Lisa Madigan on Friday demanded in a letter that GMAC show that it did not violate the state’s Consumer Fraud Act as it foreclosed on homeowners. Madigan said she would act if it is determined GMAC was rubber-stamping affidavits.
GMAC said it is working through affected foreclosures and was confident that its errors did not result in inappropriate losses of homes. Its review has found no factual misstatements on items, such as delinquency and validity of the note, it said.
“We hope to see the vast majority remediated over the next several weeks and before year end without serious consequence to the foreclosure process on the properties which are affected,” GMAC said.
Rating companies Standard & Poor’s and Moody’s Investors Service have said they may lower their assessments of GMAC’s servicing, on concern the errors may cause foreclosure delays that are costly to investors.
What’s more, if GMAC must refile foreclosures, that may give incentives to borrowers to bring legal challenges, adding to costs and reducing the proceeds when the foreclosed home is sold, analysts at Barclays Capital said in a research note. (Reporting by Al Yoon; Editing by Kenneth Barry)