Per an article in yesterday’s Washington Post by Dina ElBoghdady and Ariana Eunjung Cha, Ally Financial is withdrawing all foreclosures in the state of Maryland that were robo-signed by Jeffrey Stephan. Ally intends to resubmit the foreclosures down the road. In case you were unaware, “robo-signing” may or may not have been a widespread process whereby lender employees signed thousands of documents without review or in some cases, any knowledge of what they were signing whatsoever. For further background on the robo-signing mess, check this piece, among others, on Yves Smith’s Naked Capitalism site.
Ally Financial, previously known as GMAC, said it will resubmit around 250 foreclosures in Maryland in light of the robo-signing. Curiously, it has no plans to do so in other states. From the article:
“What they’re doing is triage,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “They’re thinking: We’ve got a problem in Maryland. Let’s get in front of it. But they’re naive if they think that what they’re doing in Maryland is going to shut the door on their troubles elsewhere.”
There is increasing judicial pushback against banks for a variety of improprieties, largely relating to mortgage securitization and foreclosures. A key ruling in the Massachusetts Supreme Court invalidated at least some foreclosures in that state earlier in the month. Recent litigation in Utah and New York has also gone against the banks. The Virginia legislature has proposed new laws that will greatly affect foreclosures in that state. Per the aforementioned Washington Post article, a Maryland lawsuit where the court dismissed an Ally Financial foreclosure may have prompted the widespread withdrawal of foreclosures by Ally, although Ally’s lawyers deny this. It appears likely that Ally is trying to avoid setting a precedent that could hurt it nationally.
This is just another example of the extreme uncertainty that surrounds the foreclosure situation in this country. Nobody knows for sure where this is going, but pressure on lenders and servicers is increasing by the day. Stay tuned.
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