Regulators tell Ally Financial to freeze foreclosures

By Mary Ellen Podmolik
Posted Sep. 29, 2010 at 4:28 p.m.

The Illinois Department of Financial and Professional Regulation has asked Ally Financial to freeze all foreclosures and not initiate any new ones against Illinois homeowners until an investigation of its foreclosure practices is complete.

According to the state, more than 100,000 Illinois homeowners have mortgages that are serviced by the company, including 78,500 first mortgages.

An Ally employee testified in a Florida court case that he signed at least 10,000 affidavits a month to process foreclosures without reviewing the underlying paperwork and that those documents were then filed with the court as evidence of Ally’s rights to foreclose on the homes.

After that testimony was made public, Ally last week said it was suspending foreclosure sales and evictions in 23 states, including Illinois. However, the company was still initiating foreclosure actions against borrowers as of Friday, according to a review of case filings at the Cook County Circuit Court Clerk’s office.

Homeowners who are facing foreclosure by Ally/GMAC, or have a complaint about another mortgage company, are urged to call the state at 1-800-532-8785.

Colorado, California and Connecticut have ordered the company to stop foreclosures in those states.

Last week, the Illinois Attorney General’s office said it was “demanding” a meeting with Ally to determine how many Illinois homeowners may be involved in an investigation of the company’s foreclosure procedures and whether the state’s Consumer Fraud Act had been violated.


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