The attorney general of Connecticut has recently demanded that GMAC Mortgage/Ally Financial Inc. freeze all foreclosures in the state pending an investigation into defective foreclosure documents. Calling GMAC a “foreclosure steamroller,” Connecticut Attorney General Richard Blumenthal announced yesterday that all foreclosure actions on the part of GMAC would be halted until “the bank’s apparent failure to follow basic legal procedure” was investigated and “strong legal action” taken, if warranted, by the courts[1].
Recently, a GMAC/Ally Financial employee admitted that he had signed thousands of foreclosure affidavits without following any of the required legal procedures for doing so. Before a foreclosure can begin, the accuracy of the foreclosure affidavit must be ascertained and the affidavit must be properly notarized. However, this employee, dubbed the “Robo-signer,” signed thousands of these affidavits in Connecticut alone without doing either. While this oversight will likely undermine thousands of foreclosures, it could potentially interfere with the original mortgages as well since currently there is no clear indication of the scope of the problem.
GMAC/Ally Financial is experiencing similar problems throughout the country, with nearly 23 states reporting defective foreclosures on the part of this lender and linked to the Robo-signer in nearly all cases. GMAC/Ally originally stated that the problem was a “mere technicality,” but now has admitted that at least this one signer did not follow legal procedures, which is considered “fraud on the court.” Blumenthal believes that the robo-signer was allowed to skirt the legal requirements surrounding affidavit handling in order to “increase the volume and pace of foreclosures.” GMAC/Ally’s Connecticut deadline to comply with the investigation by providing information on past handling of foreclosures and future guidelines for doing so is October 15, 2010, but the investigation could stall all GMAC/Ally-related foreclosures indefinitely.
[1]http://nationalmortgageprofessional.com/news20677/attorneys-general-continue-attacks-gmacs-robo-signer
