California AG Calls for Ally Financial Foreclosure Freeze

September 24, 2010 No Comments »

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California Attorney General Jerry Brown today called on Ally Financial, formerly GMAC, to immediately prove that it is complying with state law, or cease and desist from foreclosing on homes in the state.

State law prohibits mortgage lenders from recording notices of default (NODs) on mortgages originated between January 1, 2003 and December 31, 2007, unless the lender contacts or makes a “diligent effort” to contact the borrower to determine loan modification eligibility.

News outlets have reported that the head of Ally Financial’s document processing team, now known as the “super robot signer,” routinely approved and signed foreclosure documents without even confirming they were accurate and/or legally sufficient.

“I’m taking this action to protect California homeowners facing the tragedy of foreclosure,” Brown said in a release. “They are clearly in jeopardy since an Ally Financial official admitted his review of thousands of critical foreclosure documents was really a sham.”

“Prior to resuming foreclosures here, the company must prove that it’s following the letter of the law,” Brown added.

Ally Financial has already halted evictions, cash-for-keys transactions, and lockouts in 23 states as a result of the discrepancies.

During the fist half of the year, Ally Financial originated $26 billion in mortgages, with nearly a quarter in California, making it the fourth biggest mortgage lender in the country.

Ally Financial also services home loans on behalf of numerous other companies and investors.

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