A day after being named in a lawsuit by Massachusetts' attorney general, GMAC Mortgage, the lending and servicing arm of Ally Financial Inc., announced Friday that it will stop purchasing new mortgage loans in the Commonwealth of Massachusetts that are originated by correspondent lenders and wholesale brokers.
In a statement, the company said the action is due to recent developments that ‘have led mortgage lending in Massachusetts to no longer be viable.’
GMAC was one of five lenders sued Thursday by Massachusetts Attorney General Martha Coakley in connection to claims of illegal foreclosures and deceptive loan servicing. Coakley also filed suit against Bank of America, Wells Fargo, JPMorgan Chase and Citi, as well as Mortgage Electronic Registration Systems Inc. (MERS) and its parent company, MERSCORP Inc.
On Friday, GMAC said it would continue to service its existing customers and honor its contractual obligations as a servicer.
"The company is disappointed that it can no longer participate in offering certain financing options in Massachusetts; however, it has an obligation to manage risks and deploy capital in an appropriate manner and in a way that protects the investment of the U.S. taxpayer," GMAC said in the statement.