Sen. Franken steps up pressure on Ally Financial

Senator Al Franken (D-MN) delivers his opening remarks during the confirmation hearings for U.S. Supreme Court nominee Judge Sonia Sotomayor before the U.S. Senate Judiciary Committee on Capitol Hill in Washington July 13, 2009. REUTERS/Kevin Lamarque

WASHINGTON (Reuters) - Senator Al Franken on Thursday called on half a dozen federal agencies to investigate the foreclosure practices of government-controlled Ally Financial, which has been accused of kicking homeowners out of their homes with fraudulent documents.

“It is crucial that Ally and its employees are held fully accountable for any criminal misconduct,” Franken wrote in a letter to Federal Reserve Chairman Ben Bernanke, Attorney General Eric Holder and other agency chiefs.

Ally subsidiary GMAC Mortgage announced last week that it had suspended evictions and post-foreclosure closings in 23 states due to concerns over paperwork.

At least four state attorneys general are investigating Ally, formerly known as GMAC, for its foreclosure procedures.

The home lending unit of Ally Financial, which is 56.3 percent owned by the U.S. government after a $17 billion bailout, has said employees preparing foreclosures had submitted affidavits to judges containing information they did not personally verify.

“Concerns have been raised that Ally’s practices are not an anomaly in this industry,” Franken wrote in the letter dated September 29 and made public on Thursday.

On Wednesday, JPMorgan Chase and Co announced it was also delaying foreclosure proceedings.

U.S. mortgage servicers are already struggling to deal with the millions of homeowners unable to pay their mortgages, and the announcements by Ally and JPMorgan have raised concerns that process could grind to a halt.

Reporting by Corbett B. Daly; Editing by Andrew Hay