Ohio Attorney General Sues Ally Financial Over Alleged Foreclosure Fraud, First In A Possible Wave Of Lawsuits

WASHINGTON — Ohio's attorney general is suing Ally Financial Inc. and its GMAC Mortgage division, alleging the company violated state fraud laws in handling foreclosure cases.

The action could be the first in a wave of lawsuits by state regulators over what appear to be widespread problems in documents used by the nation's largest mortgage lenders.

Attorney General Richard Cordray said Wednesday the alleged fraud could involve hundreds of foreclosures in the state. The lawsuit claims the company's employees signed and filed false affidavits to mislead courts. Cordray called the alleged fraud the "tip of an iceberg of industrywide abuse of the foreclosure process."

A message left at Ally was not immediately returned.

"It certainly seems likely that other states will follow," said Diane Thompson, counsel at the National Consumer Law Center.

Three banks have halted foreclosures in 23 states after evidence surfaced that their employees or outside lawyers signed documents without reading them or filed inaccurate paperwork. State and federal officials have been ramping up pressure on the industry over concerns about potential legal violations.

Cordray is asking for civil penalties of up to $25,000 for every violation of the state's consumer laws and for the company to pay back any financial losses to the homeowner. He also wants the court to halt any Ally foreclosure or sale of property now pending in Ohio.

He sent letters Wednesday to four major mortgage lenders and servicers in Ohio – JPMorgan, Bank of America, Wells Fargo and Citigroup – to find out more about their foreclosure processes.

Also Wednesday, North Carolina's attorney general said he began investigating the state's 15 largest mortgage lenders in late September amid questions about Ally policies.

Attorney General Roy Cooper has asked each of the lenders to stop foreclosure proceedings during the review. He wants the companies to show that their procedures comply with the law.

___

Sanner reported from Columbus, Ohio.

Comments

[Wild Turkey]

05:52 PM on 10/08/2010

see: Garn-St. Germain Depository Institutions Act of 1982, Title VIII, for the origins of the adjustable-rate mortgage, and other "exotic" financial products!

Thanks, Ronald Reagan!

http://www.alternet.org/economy/125575/happy_birt­hday_ronal­d_reagan_%28thanks_f­or_ruining­_america%29/

[Telemachus]

10:16 AM on 10/08/2010

What a shame. Their commercials are so cute!

[jsgaetano]

03:42 PM on 10/07/2010

Has the Ohio GOP issued an apology to the financial fraud industry yet?

[2lib4oh]

09:51 AM on 10/08/2010

They're getting bank-rolled by Koch brothers and Murdock now.They don't need the financial industry any more.

[jaslyn]

02:13 PM on 10/07/2010

hope this spreads like wildfire and the banks start feeling some of the pain they've inflicted on Americans.

[StopMakingSense2]

02:07 PM on 10/07/2010

Anybody in foreclosure not demanding to see proof that who ever is trying to do it to them actually holds the title hasn't been paying attention. Many have brought the process to a screeching halt by doing this since the mortgage companies haven't a clue where the titles are since they got turned into derivatives chopped into pieces and sent all over the planet. Hope these sleaze bags who helped make this mess and continue to try and screw their customers at every turn get sued out of business. Since deregulation made anything they do legal nobody is going to jail. Then maybe banks would have hold the loans they create, make sure they can be repaid, and have personal relationships with their customers. You know like the so called good old days the republicans claim to yearn for. Bad for business? If so, too bad, this financial disaster has been bad for business too. Let's put the suffering where it belongs.

[SteveDenver]

04:25 PM on 10/07/2010

A lot of people in arrears never appear for their foreclosure hearing, they know what's coming and they have no money for financial representation. Those who show up often face courts impatient to clear the docket and slick attorneys for the mortgage holder.

Having the Ohio AG stand up against fraud on behalf of citizens is amazing.

[Chris 54321]

01:17 PM on 10/07/2010

...now we are talking - corporate acountability...oops...oxymoron!

[SteveDenver]

04:26 PM on 10/07/2010

It gets confusing… I first noticed difficulty during the Bush era with "White House intelligence"

[radmo]

01:16 PM on 10/07/2010

And to think, our beloved congress recently put a bill on the President's desk that makes foreclosures even easier.

[econ1]

01:07 PM on 10/07/2010

Wait a minute, we (the people) own Ally / GMAC. We're suing ourselves! This is like shooting yourself in the foot.

[StopMakingSense2]

02:09 PM on 10/07/2010

If the foot has gangrene you amputate it. Sure there's a cost, but in the long run it's the lesser risk.

[Hufftee Pufftee]

12:52 PM on 10/07/2010

I agree. It's time for the bank CEO's to be arrested and sentenced to prison. Most of the big banks are about as honest as Enron.

[CaptainRenault]

02:10 PM on 10/07/2010

Fanned and Faved! -- #1.

^ ^

[Klarsonent]

12:49 PM on 10/07/2010

Looks like "Karma" is coming around to roost for the banks.

[Chris 54321]

01:21 PM on 10/07/2010

...gotta love it!
Faved -

[Scent]

12:47 PM on 10/07/2010

Those parasites make billions out of the money the people work for.

There is no question if they are criminals. Every single one of them belongs in jail for life. The only question is if the laws they bought and paid for with OUR MONEY will not let them off the hook AND keep doing what they did all those years.

And You can bet that if need be new laws will be bought, again with OUR money, if there is any danger of them going to jail.

But that will not happen. America does not punish its parasites. They will be made to pay a fine of about 2% of what they stole from us and keep going. Even Goldman Sachs got off that way and they have been so clearly proven to be criminals only their buddy Geithner could get them out.

[gorideabike]

12:07 PM on 10/07/2010

Let us hope this turns the tide. Otherwise they will send their lobbiests to the House and Senate to pass a bill making all financed property theirs. Not just now but in the foreseeable future.

[Winthorpe]

12:05 PM on 10/07/2010

Why are they showing a picture of the page from "30 Rock?"

[Kevin Atlanta]

11:55 AM on 10/07/2010

The aggression of the Banksters  in Foreclosure process can't be too clearly stated.

In July of 2009 my friend went on an extended vacation planning 4 to  6  weeks of travel and R&R.
Two weeks into this vacation the neighbor called to tell him that the Banker was changing locks on his home and the mortgage was paid to date.
In spite  of  being up  to date on the mortgage a call to the Bank claiming  the property was abandoned was all the encouragement required to foreclose on an $185,000.00 home with only $12,500.00 left on the mortgage.
This illegal  action from the Bank cost my friend the ability to obtain homeowners' insurance; emptied the escrow account so he had to come  up with $1,850.00 in property tax immediately and over $5,000.00 in legal fees to date.  The utilities were shut-off rather than changed into the Bankster's name and $1,000.00 worth of frozen food left to rot.
These Bankster Thieves are out of control and without America fighting back hard al long we are doomed to Corporate Government by purchased politicians through legitimized bribery.

[Chris 54321]

01:23 PM on 10/07/2010

- in some parts thats called makin the best of things - that's opportunity - and it is sick and morally perverted as well

[krummlaw]

11:49 AM on 10/07/2010

Civil penalties are better than nothing but the intentional filing of a fraudulent affidavit is a crime. The issue here isn't paperwork; it's the integrity of the judiciary itself. There are literally hundreds of thousands of fraudulent affidavits intentionally filed in derogation of the rule of law.

The people who signed these affidavits, and the ones who directed them, need to be charged with crimes so that it is clear that judicial integrity is assured.

Had the Justice Department brought criminal cases against AIG, BoA, etc. so that we could watch Perp Walks we'd have taken a giant step forward. Unfortunately, it didn't happen.

Now this. Once again, serious criminal violations minimized as civil issues.

Baloney.

I'm as disgusted with the Democrats as I was with the Republicans.

Let's give a black kid 3 years for a couple of grams of crack but a white whiz kid a polite fine for intentionally defrauding millions of American people and the court system upon which we have always relied.