Mortgage Battle Rages As GMAC Exits Massachusetts
The mortgage lender of Ally Financial Inc, GMAC Mortgage, is stopping nearly all its lending in Massachusetts. This exit is occurring just one day after the state of Massachusetts sued GMAC and other lenders over allegedly improper foreclosure practices.
GMAC Mortgage, the fifth largest mortgage originator in the United States, is leaving because recent developments has made mortgage lending in Massachusetts no longer viable. This announcement comes on the heels of Attorney General Martha Coakley's lawsuit against the five biggest mortgage services. This is the first governmental lawsuit directed at all five mortgage services for alleged improper foreclosure practices including so-called robo-signing.
The lenders have responded with disappointment in the lawsuit and the promises of a vigorous defense. Banks have admitted that they had past problems with their foreclosure processes, but said they have not found any homeowner who was wrongly foreclosed upon. The robo-signing practice involved people who allegedly signed many foreclosure documents without reviewing them in a proper manner.
GMAC Mortgage is ceasing the purchase of loans from correspondent lenders and wholesale brokers. Those two groups make up the vast majority of GMAC's business. GMAC Mortgage, which is 74% owned by the U.S. government said that it needs to protect “the investment of the U.S. taxpayer.”
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