The lender also holds off some foreclosures, but will not say exactly why it is doing so
POSTED: 1:30 a.m. HST, Sep 21, 2010
One of the nation's largest mortgage lenders has suspended certain evictions and sales of foreclosed homes in 23 states, including Hawaii, as it corrects "a potential issue" in its foreclosure process.
GMAC Mortgage, a unit of Detroit-based Ally Financial Inc., notified brokers and agents of the suspension in a memo dated Friday. Bloomberg News first reported the memo yesterday.
The memo said GMAC Mortgage could "need to take corrective action" related to some foreclosures, and advised agents to immediately stop evictions, cash-for-key transactions and lockouts.
The lender also is extending closing dates on bank-owned property sales by 30 days and allowing buyers to cancel their agreement to purchase and get their deposit back, according to the memo.
Ally Financial said that it hasn't instituted a moratorium on residential foreclosures, just certain evictions and sales of foreclosed homes.
"In fact, all new residential foreclosures are continuing in the ordinary course of business with no interruption in our usual practice," the company said.
On the Net:» Hawaii Foreclosures
Ally Financial spokesman James Olecki said a new process has already been developed and implemented, so there will be no interruption in new foreclosures.
The company also said it is reviewing certain previously completed foreclosures where the same procedure may have been used.
Olecki declined to provide further details about the issue, saying some of the cases are in litigation.
Olecki also would not say how many foreclosure cases GMAC Mortgage has in Hawaii that are affected by the issue.
GMAC Mortgage ranked fourth among U.S. home-loan originators in the first six months of this year, with $26 billion of mortgages, according to Inside Mortgage Finance, an industry newsletter. Wells Fargo & Co. ranked first, with $160 billion, and Citigroup Inc. was fifth, with $25 billion.
Detroit-based Ally, the auto and home lender formerly known as GMAC Inc., is 56.3 percent owned by the U.S. government after more than $17 billion of taxpayer bailouts.
Besides Hawaii, other states affected by the GMAC Mortgage issue are Connecticut, Florida, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.