Hat tip to SM, from the WaPo:
Attorneys general in Connecticut and California ordered Ally Financial’s GMAC mortgage unit to freeze all foreclosures within their borders, joining a growing list of states investigating whether the firm and other lenders improperly kicked people out of their homes.
Connecticut Attorney General Richard Blumenthal on Monday accused Ally of using “defective foreclosure documents” in its filings and said he ordered the moratorium “to forestall horrendous, illegal harm against homeowners.” California Attorney General Edmund G. Brown Jr. on Friday called Ally’s document review process a “sham.”
In Illinois, Attorney General Lisa Madigan said she “wants to see Ally stop the filing of foreclosures in Illinois as well until this situation can be remedied,” a spokeswoman said.
The actions taken by state officials are illuminating an overburdened foreclosure system that relied on shoddy or fabricated paperwork to deal with the massive pile of cases. Now criminal and civil inquires are widening to other major companies who might have engaged in similar conduct.
“This has the potential to be an industry-wide issue,” said Patrick Madigan, an assistant attorney general in Iowa who is chairman of a national foreclosure prevention group that includes law enforcement officials and bank regulators, among others.