GMAC Mortgage, the fifth largest residential servicer in the U.S., said it has suspended certain foreclosures in 23 states, due to procedural problems.
The company, a subsidiary of Ally Financial, a bank holding company that is majority owned by the U.S. government, declined to quantify the situation, but said in a statement that, "all new residential foreclosures are continuing in the ordinary course of business."
As of June 30, the company serviced roughly $400 billion of home mortgages, according to figures compiled by National Mortgage News and the Quarterly Data Report. The firm stopped disclosing its delinquency figures to the newspaper almost two years ago but the last time it did, almost 20% of loans serviced by the firm – roughly $80 billion – were in some forum of arrears.
Prior to the housing bubble, GMAC was a major player in subprime, and alt-A lending, but was also a large lender in conventional and HELOC markets.
In a statement issued Monday afternoon GMAC called press reports that it had instituted a moratorium on foreclosures in 23 states "not true," adding that, "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. 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 declined to elaborate but said it was instituting new processes to fix the problem.
On Tuesday The Washington Post reported that up in Maine lawsuits have been filed saying that a "single" Ally Financial employee may have approved "tens of thousands" of foreclosures across the nation without reviewing the documents he was signing.
At press time, a spokesman for the servicer had not responded to an inquiry about the Maine cases.
