A GMAC Real Estate sign, attached to a sign advertising 0% down financing, is posted in the front yard of a home
GMAC Mortgage threw a new twist into the foreclosure process in Florida and 22 other states.
Hundreds of South Floridians facing foreclosure were sent into a new level of uncertainty this past Monday when one of the nation’s largest mortgage-servicing companies told real-estate agents to stop evicting the residents and put on hold any sales of properties that had been taken back from homeowners.
GMAC has 865 pending foreclosure cases in Broward courts as of Monday. The company also filed 940 foreclosure cases in Palm Beach County since the start of 2009, according to records from clerks of court in each country. The records don’t indicate how many of the Palm Beach cases are still pending.
It wasn’t immediately clear whether that means GMAC borrowers who are facing foreclosure would get a temporary reprieve. But the report contained hints that the company may change its course. The company told real-estate agents and brokers that it might “need to take corrective action in connection with some foreclosures.”
A spokesperson for Ally Financial, the Detroit-based parent of GMAC Mortgage, confirmed the report which was first published by Bloomberg News based on an internal memorandum. The report stated that GMAC told real estate agents and brokers to stop evictions, cash-for-key transactions and lockouts.
Also, sales will be suspended for GMAC-owned properties, closing dates are to be extended 30 days and buyers can cancel purchase agreements and get their deposits refunded.
The spokesperson would not provide any other details and the company did not issue a statement. However, GMAC Mortgage did not say it was putting all foreclosures on hold.
The South Florida housing market is one of the nation’s hardest hit by foreclosures. To clear a backlog of tens of thousands of pending cases, the state’s courts last summer initiated streamlined procedures and started sending troubled borrowers to mediation with their lenders. But critics of the system have said that the so-called “rocket dockets” are not allowing homeowners or some mortgage holders to get a fair shake.
Guy Cecala, publisher of Inside Mortgage Finance, a trade publication said GMAC is the nation’s fifth-largest mortgage servicer, handling mortgages valued at a total of more than $349 billion as of June 30. Cecala said there are no state-specific numbers available but he estimates GMAC could account for 10 to 15 percent of the mortgage servicing in Florida. Cecala states: “Like most people I don’t have any inside information on exactly why GMAC is doing it. It’s clearly some legal problem or concern they have that somehow the foreclosures could be challenged.”
The company has recently come under fire in courts in Florida. In April, St. Petersburg-based Circuit Judge Anthony Rondolino threw out a GMAC foreclosure after he found that legal papers from GMAC’s law firm were filed by someone who had no knowledge of the mortgage’s status. In June, American Residential Equities, a Miami-based real-estate company, filed a federal lawsuit against GMAC alleging neglect of thousands of mortgage loans and properties since 2004.
American Residential Equities’ President and CEO Jeffrey Kirsch charged the company with not following instructions, failing to report results, bungling the servicing process and jeopardizing the value of the mortgages. In addition, the lawsuit accuses GMAC of failing to maintain its properties and protect them against weather damage, vandalism and fines from governments. He stated in a press release: “GMAC has systemically mismanaged hundreds of loans and properties in our portfolio.”
Advocates for troubled borrowers were buzzing about the possibilities that there would be a foreclosure moratorium at GMAC and the possibility that other lenders might follow suit. Ally Financial who is formerly known as GMAC Inc. has the federal government as its majority owner, following a $17 billion taxpayer bailout.
Terri Schmitz, senior underwriter and president of Amerifirst Funding in Fort Lauderdale, concluded: “The good news is that for some foreclosures the process was not handled properly but the playing field is being leveled.”
