Calif. AG Clamps Down On Lender - Comply With Law Or Stop Foreclosures, Brown Tells Ally Financial

[Kadie]

Calif. AG Clamps Down On Lender
Comply With Law Or Stop Foreclosures, Brown Tells Ally Financial

POSTED: 11:27 am PDT September 24, 2010
UPDATED: 11:50 am PDT September 24, 2010

SACRAMENTO, Calif. -- California's attorney general on Friday directed Ally Financial, Inc., formerly known as GMAC, to prove immediately that it is complying with state law or, if it cannot, to stop foreclosing on California homes.

"I'm taking this action to protect California homeowners facing the tragedy of foreclosure," Jerry Brown said in a prepared statement. "They are clearly in jeopardy since an Ally Financial official admitted his review of thousands of critical foreclosure documents was really a sham."

Brown, a Democrat, is running for governor against Republican Meg Whitman.

State law prohibits lenders from recording notices of default on mortgages made between Jan. 1, 2003, and Dec. 31, 2007, unless, subject to limited exceptions, the lender contacts or tries diligently to contact the borrower to determine eligibility for a loan modification. A notice of default must include a declaration of compliance with state law.

Brown's office said recent reports indicated that the head of Ally Financial's document processing team testified he routinely approved and signed foreclosure documents without confirming they were accurate and legally sufficient, as he was required to do. The worker approved foreclosure cases at such a rapid rate that he was known by consumer advocates as the "super robot signer," Brown's staff said in a news release.

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