Ally Financial Inc.’s GMAC Mortgage unit told Freddie Mac that foreclosures by the auto and home lender might have been faulty weeks before halting its own evictions, according to two people briefed on the matter.
Ally informed Freddie Mac on Aug. 25 that affidavits for court proceedings might not be valid, according to a person with direct knowledge of the matter. By Sept. 1, Freddie Mac had notified its network of lawyers and stopped related foreclosures and evictions, said the person, who declined to be identified because the matter hasn’t been formally disclosed. GMAC told agents to halt evictions in 23 states on Sept. 17.
Fannie Mae, the largest government-backed mortgage firm, said it notified lawyers of flaws in GMAC documentation after it was alerted. Fannie Mae spokesman Brian Faith declined to say when GMAC contacted the company, and Gina Proia, the spokeswoman for Detroit-based Ally, said she couldn’t comment.
“We are obviously dismayed by reports of document problems,” Freddie Mac spokesman Brad German said in an interview. “The practices described in these reports are clearly not in compliance with Freddie Mac guidelines and servicer directives.” German wouldn’t say how many of the McLean, Virginia-based firm’s holdings were affected by the freeze.
Servicers ‘Accountable’
Fannie Mae said in a statement that its servicers must adhere to all legal requirements. “It is their responsibility to put processes in place that ensure they are fulfilling this requirement, and they are accountable for rectifying any issues that may arise in this regard.”
Ally faces allegations that its GMAC unit evicted homeowners without verifying that borrowers actually defaulted or whether the firm had legal standing to seize the homes. Ally, Freddie Mac and Fannie Mae are majority-owned by the U.S. government, which has been pressing lenders to reduce foreclosures as evictions hit record levels.
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One question, why is there car loans mixed up with home loans?
If the government bought those defected loans with our tax dollars, should they not then give us clear title? Seems as if they paid them of … again…should they not have gotten proper notes along with the purchase? What is going on? How can they buy over faulty loans and not ensure they were properly processed?
Can you imagine the mess these lawyers may have with all the car loans as well?
California attorney general issued cease & desist letter to GMAC/Ally. Is this the first non-judicial state to tell GMAC to bugger off?