September 21, 2010 / 10:03 PM / 7 years ago

GMAC suspends evictions after affidavits challenged

NEW YORK (Reuters) - GMAC Mortgage, a unit of Ally Financial Inc, asked some outside vendors to suspend some evictions after consumer attorneys and state officials started questioning the documents used in foreclosures, according to lawyers and court documents.

GMAC suspended evictions in 23 states last week after discovering that employees submitted affidavits containing information they did not personally verify, and that in some cases were not signed in the presence of a notary, a company spokeswoman said on Tuesday. Those states, including New York, Ohio and Florida, require foreclosures to be approved in court.

"We are reviewing every affidavit in the states in question," Ally spokeswoman Gina Proia said on Tuesday.

"The substantive content of the affidavits are factually accurate," she said, calling the problem in a follow-up email "an important, but technical, defect."

A GMAC employee signed off on tens of thousands of affidavits containing information he did not personally verify, according to a deposition taken in December 2009 by the homeowners' law firm Ice Legal PA.

"Foreclosure defense attorneys have been raising (the problem with affidavits) for a while," said Christopher Immel, the Ice Legal attorney who took the deposition.

But generally when homeowners' lawyers challenge the affidavits in court, "the banks aren't really withdrawing the foreclosure case, they're withdrawing the affidavit and replacing it with a new one," Immel said.

The Florida attorney general's office is also investigating "whether improper documentation may have been created and filed with Florida courts to speed up foreclosure processes," by law firms who represent mortgage lenders, according to an August press release from the office.

The attorney general is not directly investigating GMAC, Shannon Knowles, a spokeswoman for the attorney general's office, said by email on Tuesday.

But GMAC's decision to suspend evictions "could be a result of our efforts and the attention our office has paid to this issue," she wrote.

GMAC is not alone in its use of improper documentation, consumer attorneys said.

"What GMAC has been doing with affidavits ... is no different from what anyone else has been doing in the mortgage servicing business," said O. Max Gardner III, a consumer bankruptcy attorney.

"This is business as usual for the mortgage servicing industry. GMAC just got caught," he said.

GMAC's decision to suspend foreclosures due to defective affidavits was first reported by Bloomberg.

Reporting by Maria Aspan; Editing by Phil Berlowitz

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