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Real Estate & Property Law

GMAC Suspends Foreclosures in 23 States After Questions About Legal Paperwork

Posted Sep 20, 2010 5:22 PM CDT
By Martha Neil

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One of the nation's largest home mortgage servicers has temporarily halted foreclosures, eviction lockouts, cash-for-keys transactions and sales of foreclosed homes in 23 states, including Florida, Illinois, New York, Ohio and Pennsylvania.

The move by GMAC Mortgage follows increasing questions about whether legal paperwork in the Sunshine State—and three high-volume law firms there that helped prepare foreclosure documents—have complied with court requirements, reports the Palm Beach Post.

Almost all the jurisdictions at issue are "judicial" states, reports Bloomberg, which broke the news and provides a list of the 23 states. The news agency says buyers who are already under contract will be allowed to cancel and get their money back.

Details of what, exactly, the issue may be are scarce, but the Florida Default Law Group has been withdrawing affidavits in GMAC foreclosure cases in Florida that may have been inaccurate, the Post says.

Although the temporary suspension of foreclosures for unspecified "corrective action" may delay existing cases already in the pipeline, it won't slow down new foreclosures, a GMAC spokesman said today.

Attorney Matt Weidner of St. Petersburg, Fla., is defending a case in which a GMAC affidavit was withdrawn.

"I suspect they are recognizing they have a really big problem," he tells the Post, predicting that other mortgage servicers could also be affected. "I think they are afraid the foreclosure judgments may be voidable."

Additional and related coverage:

ABA Journal: "Banks Gone Wild"

ABAJournal.com: "Fla. AG Probe: Did 3 Law Firms Get 1,000s of Foreclosure Judgments By Possible Wrongdoing?"

ABAJournal.com: "Fla. AG Probes Large Foreclosure Law Firm re Possible ‘False & Misleading’ Mortgage Docs"

Associated Press: "GMAC stops some evictions, foreclosed home sales"

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