Just about two weeks ago, the country's fourth largest lender, GMAC announced it was suspending foreclosure and eviction actions in 23 states, including Ohio. The reason? A document processor for the company admitted he had approved 10,000 foreclosure documents a month without even reading them. In the days that followed, Bank of America and JP Morgan Chase also halted foreclosures in states that require judicial approval. They, too, were concerned about the integrity of their foreclosure actions.
On Wednesday, Ohio's Attorney General Richard Cordray filed a civil suit against GMAC, its parent company Ally Financial, and the processor who had admitted to signing all those documents.
Richard Cordray: We are talking about lenders and servicers treating foreclosure not as a legal proceeding that deserves the careful attention of the property owner, the servicer of the mortgage and the courts, but rather as a production line - making widgets - that accords foreclosures little deliberate accuracy that the law, or for that matter, basic courtesy and common sense mandates be given to such serious matters.
Cordray's office is asking the court for civil penalties of up to $25,000 for every violation of the state Consumer Sales Practices Act and restitution for borrowers. The AG's office also sent letters asking for meetings with four other major lenders to discuss their foreclosure practices: JP Morgan Chase, Bank of America, Wells Fargo and CitiMortgage. Ally Financial, GMAC's parent company, has not yet responded to requests for comment.
In Texas, the state Attorney General Greg Abbott called on 30 mortgage lenders to suspend foreclosure actions across the Lone Star State because of concerns over possible notarized yet unread paperwork. Included among the 30 lenders was Cleveland's former National City Bank, now PNC.