foreclosure laws
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California puts Ally Financial on notice over botched foreclosures
Atty. Gen. Jerry Brown orders the lender to halt foreclosure proceedings in the
state unless it can prove it has followed state laws.
September 25, 2010|By
E. Scott Reckard, found at Los
Angeles Times
California ordered Ally Financial Inc. to prove it was complying
with foreclosure laws in the state or stop seizing properties, a reaction to the
lender's suspension of evictions in 23 other states because of botched
foreclosure paperwork it filed with courts.
The Detroit company, formerly known as GMAC, didn't suspend evictions in
California because almost all foreclosures here by it and other lenders don't
require a court order.
Still, Atty. Gen Jerry Brown on Friday told Ally to halt foreclosures in the
state unless it can prove it is observing state laws.
Brown specifically cited a requirement that lenders, before initiating
foreclosure proceedings, must try diligently to contact borrowers to determine
eligibility for modifications of home loans written from 2003 through 2007.
California homeowners "are clearly in jeopardy since an Ally Financial
official admitted his review of thousands of critical foreclosure documents was
really a sham," Brown said.
Jeffrey Stephan, the head of Ally's document processing team, has acknowledged
in a deposition that he signed affidavits certifying that foreclosure paperwork
was correct even though he didn't read the documents or sign them in the
presence of a notary public, as required by state law.
Ally is the fourth-largest U.S. home lender after Wells Fargo & Co., Bank of
America Corp. and JPMorgan Chase & Co. Brown said 24% of its loans in the
first half of this year were made in California.
An Ally spokeswoman, Gina Proia, declined to comment on Brown's order.
Instead, Proia issued a statement saying Ally believes the information in the
affidavits it submits in foreclosure cases †such as the loan's balance, its
delinquency and the validity of the note †was factually correct.
The statement said the company did not believe the "procedural errors"
had resulted in any inappropriate foreclosures.
"The company has temporarily suspended evictions and post-foreclosure
closings in the 23 states while we conduct a review," Ally said. "We
hope to see the vast majority remediated over the next several weeks."
scott.reckard@latimes.com
