Brown Asks for Halt to All GMAC/Ally Financial Evictions in California

26 Sep

By: David Dayen Saturday September 25, 2010 7:37 am

When Ally Financial, formerly GMAC Mortgage, appeared to suspend foreclosure evictions in 23 states, they left out the ones where a judge is not required to sign off on foreclosures, including California, one of the four “sand states” with a massive amount of delinquencies and defaults. However, Attorney General Jerry Brown, who is running for Governor, has found a reason to demand a delay to any Ally/GMAC foreclosures:

California officials today demanded that Ally Financial Inc. stop foreclosing on homes in the state, citing reports indicating the big mortgage lender is violating the law.

The cease-and-desist letter, issued by Attorney General Jerry Brown, came as officials in several other states began investigating Ally’s operations […]

According to Brown, California law forbids a lender from issuing a notice of default – the first step toward foreclosure – unless it can show it has tried to contact the borrower. The law covers mortgages originated between 2003 and 2007.

If Jeffrey Stephan, the robo-signer who processed thousands of Ally/GMAC foreclosure affadavits with the courts, spent around a minute on each set of documentation, he cannot possibly say with any certainty that the lender contacted the borrowers. As Yves Smith says, Stephan could also have been engaged in a cover-up, knowingly signing off on documents where the lender never made the contact.

The New York Times has finally jumped in on this, assigning the article to David Streitfeld, who has revealed his bias against homeowners in previous stories. Streitfeld generally gets this one right, although you can see his slip showing at various points.

Florida lawyers representing borrowers in default said they would start filing motions as early as next week to have hundreds of foreclosure actions dismissed.

While GMAC is the first big lender to publicly acknowledge that its practices might have been improper, defense lawyers and consumer advocates have long argued that numerous lenders have used inaccurate or incomplete documents to remove delinquent owners from their houses.

The issue has broad consequences for the millions of buyers of foreclosed homes, some of whom might not have clear title to their bargain property. And it may offer unforeseen opportunities for those who were evicted.

“You know those billboards that lawyers put up seeking divorcing or bankrupt clients?” asked Greg Clark, a Florida real estate lawyer. “It’s only a matter of time until they start putting up signs that say, ‘You might be entitled to cash payment for wrongful foreclosure.’”

I hope he’s not intimating that the borrowers are taking advantage of the poor lenders and servicers, and using fly-by-night ambulance chasers to boot. GMAC/Ally, and many other lenders, broke the rules, lied to the judges, forged signatures, and took people’s homes under false pretenses. I know this isn’t normal practice in this country anymore, but they’re supposed to face the consequences.

Streitfeld also gets the Treasury Department on the record. The federal government is the majority owner in GMAC during the bank bailout.

“We have discussed the current situation with GMAC and expect them to take prompt action to correct any errors,” said Mark Paustenbach, a spokesman for the Treasury Department.

Sounds pretty hands-off to me. But they’re going to have to face up to this problem soon, because it’s about to spread nationwide.

One Response to “Brown Asks for Halt to All GMAC/Ally Financial Evictions in California”

  1. Jimmy Rivera September 27, 2010 at 3:26 pm #

    What about the rest of the “forty” thiefs?

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: