NPL Investor Sues GMAC For Mismanaged Loan Servicing

an Residential Equities LLC (ARE), a Miami-based real estate company that buys and liquidates pools of nonperforming residential mortgages, says it has filed a lawsuit against GMAC Mortgage Corp. The suit, filed in the Southern District of Florida, alleges that GMAC failed to properly service mortgages and real estate owned (REO) properties owned by ARE. In addition, ARE says in the lawsuit that it was pressured by GMAC into offering preferential treatment and a loan modification to Georgia State Rep. Joe Heckstall's brother, Cornelius Heckstall. ARE has been working for the past year to transfer servicing responsibilities for its loans away from GMAC, the company says, adding that it has since learned that GMAC allegedly failed to properly service a number of ARE mortgage loans and REO properties. "In violation of our agreement, GMAC has systematically mismanaged hundreds of loans and properties in our portfolio," says Jeffrey Kirsch, president and CEO of ARE. "Not only did they fail to complete the simplest activities required of all mortgages services companies, but they repeatedly disregarded our instructions, ignored our requests for reports and jeopardized our assets." GMAC has refused ARE's requests to audit its books and records, ARE alleges. The suit charges that GMAC failed to maintain properties, subjecting them to weather damage, vandalism and government fines. In other cases, properties were over-insured, while timely insurance claims were not filed for other mortgaged properties. According to the lawsuit, Heckstall contacted GMAC on behalf of his brother and requested that his mortgage be modified a second time. ARE contends that GMAC pressured the company to offer a second mortgage modification to Cornelius Heckstall, despite the fact that he had failed to make payments according to an earlier loan modification with identical terms. "While GMAC repeatedly neglected the assets in our portfolio, they appeared to bend over backwards for Rep. Heckstall's brother," says Kirsch. "We bowed to the pressure, because it gave us more time to find a competent replacement servicing company." SOURCE: [link=]American Residential Equities LLC


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