Moody's Investors Service on Friday placed GMAC's primary and special servicer quality ratings on review for possible downgrade, citing what it calls "irregularities" in the company's foreclosure process.
Moody's said GMAC's problems could result in foreclosure delays "and longer REO timelines, as well as reputational risk, legal challenges to previously completed foreclosures and long-term liquidity concerns for GMAC Mortgage."
The company had hoped to go public, possibly as early as next year. (See the Monday edition of National Mortgage News for an update on the IPO.)
GMAC Mortgage is one of a handful of brand names used by Residential Capital Corp., the nonbank mortgage subsidiary of Ally Financial, a bank holding company majority owned by the Treasury Department.
Earlier this week, Ally revealed that it had halted certain foreclosures in 23 states after it had discovered "technical defects" in foreclosure documents.
According to figures compiled by National Mortgage News and the Quarterly Data Report, ResCap services just shy of $400 billion in residential loans with delinquencies well above the industry average of 10%.
In a recent 10-Q filing with the Securities and Exchange Commission, Ally Financial admitted that it received one of 64 subpoenas issued by the Federal Housing Finance Agency regarding private-label securities that were purchased by Fannie Mae and Freddie Mac.
