Reports that GMAC Mortgage has instituted a moratorium on all residential foreclosures in 23 states are untrue, the servicer said in a statement released Monday afternoon. According to the company, all new residential foreclosures are ‘continuing in the ordinary course of business with no interruption in our usual practice.’
Bloomberg broke the story Monday, citing a GMAC memo dated Sept. 17. An Ally Financial spokesperson had confirmed the contents of the memo, which Bloomberg reported as directing the suspension of evictions and cash-for-keys deals.
In its statement Monday, GMAC said it had previously directed certain outsource vendors to allow time to address a ‘potential issue that was raised in a number of existing foreclosures challenging the internal procedure we used for executing one or more judicially required forms.’
‘This direction was to suspend evictions and [real estate owned] closings where the related foreclosure could have been impacted by the same internal procedure,’ the statement said. ‘We are also reviewing certain previously completed foreclosures where the same procedure may have been used.’
Citing ongoing litigation, GMAC said it is unable to comment on the specific merits of the challenge to its procedure, but added that it has developed and implemented a new process. Some existing foreclosures may be delayed while corrective action is taken, but new foreclosures will continue without interruption, GMAC said.
‘These delays are expected to be resolved within the next few weeks and certainly before year end, without serious consequence,’ the statement continued. The company said it has been addressing the procedural challenge for more than three months.
Analysis by Barclays Capital analysts Jasraj Vaidya and Sandipan Deb indicated that of the 23 states included in the memo obtained by Bloomberg, all but one – North Carolina – are judicial states.
Their analysis of LoanPerformance data additionally showed a high share of delinquent loans within the states – 40% of GMAC's delinquencies are in the 23 states, with a higher concentration in Alt-A and subprime.