GMAC Mortgage, a unit of Ally Financial, is under scrutiny for possibly not following the rules when it processed foreclosure papers. And it turns out it may not be the first time.
According to a report by Bloomberg News, GMAC was reprimanded four years ago its processor failed to read the documents and sign them in the presence of a notary, as required. The company is now accused of doing the same thing, with attorneys for evicted homeowners calling into question the legality of the procedure.
A large number of states have what is called a judicial process in a foreclosure, meaning the lender must file an affidavit that confirms the basic facts of the case. There have been so many affidavits that GMAC reportedly relied on robo signers to sign some of the documents.
Bloomberg cites a 2006 Duval County, Florida court order that said GMAC's sworn affidavits in a foreclosure case were false testimony because the mortgage officer did not follow the rules about reading and signing.
Last week GMAC Mortgage suspended evictions in 23 states because of a technical deficiency in the review process. It followed disclosure that mortgage processor Jeffrey Stephan testified in a deposition that he did not always read or sign the documents as required.
Abuse of the process
We're concerned about this because it appears to be a clear abuse of the process, Sturat Rossman, Director of Litigation for the National Consumer Law Center, told ConsumerAffairs.com.
Legal experts are still reviewing facts and say its unclear what this case might mean for homeowners who lost property to foreclosure. But if Stephan's signature appears on your foreclosure papers, Rossman says you should take action.
Homeowneres should immediately notify the attorney who is handling their foreclosure, Rossman said. Further, they should also contact their state attorney general.
It's not known how many foreclosed loans might be affected. The company ranked fourth among loan-originators in the U.S. early this year and fifth among loan servicers.
The practice may also extend beyond GMAC. NPR reports the State of Florida is investigating four law firms that help loan servicers like GMAC.
Plaintiff's lawyers, meanwhile, are conducting depositions with executives at other loan servicers, focusing on their internal procedures for reviewing and signing documents.
