Fed Releases Letter Related to GMAC – Ally Financial Mortgage Malfeasance

Full article by Ben Hallman on Huffington Post here, and the letter is linked within his article,

The letter dated Feb. 1 is from the bank’s mortgage servicing unit, GMAC Mortgage, to PricewaterhouseCoopers, the accounting firm it hired to review troubled loans as part of a 2011 agreement with federal regulators. It puts a number on some of the mortgages the bank may have handled incorrectly. Some highlights:

  • GMAC started foreclosure proceedings on 1,270 borrowers who were in some stage of the bankruptcy process, and thus should have been protected from foreclosure.
  • GMAC carried out foreclosure sales on 1,577 borrowers who were awaiting a decision about a loan modification. This is known as “dual tracking” and is one of the biggest complaints of homeowners and their advocates.
  • The mortgage servicer hired a law firm that was subsequently “delisted” to process 30,235 foreclosures. The names of the firms are redacted, but presumably include several of those accused of forging documents as part of the robo-signing scandal.
  • The mortgage servicer denied 50,030 borrowers for a government-run Home Affordable Modification Program, and then offered no alternative modification.

GMAC says in the letter that the number of borrowers subject to the review — those whose homes were in some stage of foreclosure in 2009 or 2010 — is 232,132. That’s a small share of the estimated 4.5 million borrowers whose loans were handled by one of the 14 mortgage servicers who signed consent agreements with the federal Office of the Comptroller of the Currency and other regulators in early 2011.

Those agreements with federal regulators require the servicers to reform how they manage troubled loans and also set up the Independent Foreclosure Review. The latter is a program that allows borrowers who think their servicer made a mistake during the foreclosure process to submit a claim for review. As The Huffington Postpreviously reported, most eligible borrowers so far haven’t applied, though they have until the end of July.

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