GMAC mortgage brokers told to halt foreclosures in Iowa, elsewhere

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Officials with Ally Financial Inc.’s GMAC Mortgage unit told brokers and agents to halt foreclosures on homeowners in Iowa and 22 other states, Bloomberg reported today.

GMAC Mortgage may “need to take corrective action in connection with some foreclosures” in the affected states, according to a two-page memo dated Sept. 17 that was obtained by Bloomberg News. Ally Financial spokesman James Olecki confirmed the contents of the memo.

Brokers were told to stop evictions, cash-for-key transactions and lockouts, regardless of occupant type, according to the document, addressed to GMAC preferred agents. The order was effective immediately, Bloomberg said.

The company will also suspend sales of properties on which it has already foreclosed. The letter tells brokers to notify buyers that the company will extend the closing date on all sales by 30 days. Buyers will be able to cancel their agreement to purchase and get their deposit back, according to the letter.

GMAC Mortgage ranked fourth among U.S. home-loan originators in the first six months of this year, with $26 billion of mortgages, according to industry newsletter Inside Mortgage Finance. Wells Fargo & Co. ranked first, with $160 billion, and Citigroup Inc. was fifth, with $25 billion.

GMAC was created in 1919 to provide financing for buyers of General Motors Co. vehicles. GMAC converted into a bank holding company in 2008 as it received more than $17 billion of government funds during the financial crisis. It rebranded itself Ally Financial last year, and continues to offer auto loans and mortgages.

The other states falling under the order are Connecticut, Florida, Hawaii, Illinois, Indiana, 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.