Tuesday, September 21, 2010

GMAC halts foreclosures

GMAC announced that it would immediately halt all foreclosure related activity in 23 states (including Massachusetts, I believe) to complete a thorough review of their policies and procedures regarding foreclosures. The New York Times theorizes that with more and more jurisdictions requiring proof that the foreclosing lender is actually the legal holder of the underlying note and mortgage, GMAC's "fast and loose" approach to documenting transactions might now pose a substantial risk of liability to the company. If, for example, GMAC foreclosed on a mortgage that had not properly been assigned to it, the foreclosure could be void. If that property had already been sold to a third party buyer, that buyer's title would be flawed. GMAC's stand down is probably necessary to avoid additional problems, but this also means that more and more abandoned and thought-to-be-foreclosed homes currently on the market will remain unsold and unoccupied for months to come which in turn will further diminish the value of surrounding properties.

1 comment:

Michael Ruderman said...

"Old Republic National Title has sent a bulletin to agents saying that “until further notice” it would not insure title to properties foreclosed upon by GMAC Mortgage..." (October 1 New York times)