Frank requests hearing on mortgage abuses at Ally

WASHINGTON Wed Dec 7, 2011 1:11pm EST

Rep. Barney Frank (D-MA) speaks at a news conference announcing that he would not seek a 17th term in congress next year in Newton, Massachusetts November 28, 2011.    REUTERS/Adam Hunger

Rep. Barney Frank (D-MA) speaks at a news conference announcing that he would not seek a 17th term in congress next year in Newton, Massachusetts November 28, 2011.

Credit: Reuters/Adam Hunger

WASHINGTON (Reuters) - Congressman Barney Frank on Wednesday asked his colleagues to hold a hearing on alleged mortgage abuses at Ally Financial, a day after the attorney general from his home state of Massachusetts requested that lawmakers investigate.

"Given Ally's significant role in the mortgage business and the federal government's considerable financial investment," Frank wrote to Spencer Bachus, the chairman of the House Financial Services Committee, "a prompt investigation of this matter by the Committee is warranted."

The U.S. Treasury owns some 74 percent of Ally after a 2008 investment in the firm.

Last week Massachusetts sued Ally's mortgage unit, GMAC Mortgage, and four other top banks for allegedly pursuing illegal foreclosures and deceiving homeowners whose loans they service.

The next day Ally said it would stop buying new mortgage loans in Massachusetts that were made by correspondent lenders and wholesale brokers.

On Tuesday, the state's attorney general, Martha Coakley, sent a letter to Bachus and Senate banking chairman Tim Johnson requesting they investigate Ally's "serious misconduct."

In his letter on Wednesday, Frank, the top Democrat on the House Financial Services Committee, threw his support behind Coakley's request.

The developments come as state and federal officials attempt to hammer out a broader settlement with the banks to resolve mortgage servicing and foreclosure abuses.

As those talks dragged into their second year, Coakley filed her lawsuit and said it was taking too long to forge a nationwide deal.

A spokesman for the House committee and a spokeswoman for Ally did not immediately respond to requests for comment.

(Reporting by Aruna Viswanatha; editing by Matthew Lewis)

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