Mortgage giant halts foreclosures

GMAC Mortgage, part of Ally Financial, informed servicing agents to stop foreclosures in Connecticut, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.

The company also told Real Estate brokers and agents that it is suspending sales of already foreclosed homes; GMAC will extend the closing date on these sales by 30 days. Buyers can cancel purchases and get their deposits back.

GMAC Mortgage stated that it may need to take “corrective action” on some foreclosures in the 23 states listed above, according to a memo it out.

Bloomberg News reported the memo earlier on Monday, which was confirmed as accurate by spokesperson for Ally Financial.

However, later in the day on Monday, the company took pains to stress that it hadn’t had instituted a moratorium on all residential foreclosures in 23 states.

So the suspension only applies to selected REO’s where these foreclosures have been held up by challenges to GMAC’s internal procedures for executing judicially required forms, the company added. GMAC has been dealing with the problem for more than three months.

“We are also reviewing certain previously completed foreclosures where the same procedure may have been used,” GMAC Mortgage added.

GMAC Mortgage said it can’t comment on the challenge to its procedures because the issue is being litigated currently.

So for some facing a foreclosure from GMAC they may see some delays or temporary relief while others may not notice any change or slowdown in the process.