I was approved for a loan modification with GMAC. Yea!! OOPS!! Lower my payment $120 per month, add an additonal $13000 to my mortgage amount and extend my loan for another 40 years. That is some modification!! Looks like money in the bank for GMAC !! Well I'm not signing!!

Damn shame they can't do better than that…but what else can you expect from a huge and rich bank like GMAC!!!!!!!!!!

Judy – Bloomberg first published the article. See headline: http://www.bloomberg.com/news/2010-09-20/gmac-mortgage-halts-home-foreclosures-in-23-states-including-florida-n-y-.html Foreclosures are being halted along with sheriff sales postponed too. That can be a good thing.

Don't any of these banks see that by turning down loan mods and taking these properties to foreclosure and then selling them for pennies on the dollar as REO's they are creating a huge domino effect. For everyone who loses their home to foreclosure or have to sell as a short sale we end up having another bargain property in inventory dragging down prices. This is causing others to be upside down but it also takes a potential buyer out of the market because the person losing or short selling their home is no longer a qualified buyer in most cases. So with each one of these deals we end up with one more property pulling down prices and one less buyer able to buy it. This trend can not keep going indefinately. Basic logic and mathematics should be obvious to the guys running the banks. Unless this is something they are doing on purpose to make huge profits later since most of the losses are guaranteed by the government or the PMI companies. And as usual the governement is reacting instead of be proactive so they are pushing the pendulum after it is already swinging to the other extreme, causing more harm than good.

Also, here is some news regarding the first announcement from one of my realtor forums:

Various updates on the possible drivers of the GMAC announcement suspending its foreclosures in 23 states. Max Gardner, a North Carolina bankruptcy attorney who is held in high esteem and is playing a leading role in legal efforts against foreclosure fraud, provided this comment on our earlier post on the GMAC bombshell:

I believe this action relates to thousands of false affidavits filed by an officer of GMAC Residential Funding. It is also my understanding that this particular officer may be facing a multitude of federal and state criminal charges. As of this date, thousands of foreclosure affidavits have been withdrawn in Florida and a number of notices of false evidence have been filed by the mill law firms with the Florida trial and appellate courts. This, in my view, is the tip of the iceberg!

More details from Jeffrey Stephens of the Florida Default Law Group via e-mail:

On September 14, 2010, Florida Default Law Group filed “Notices” in foreclosure actions that the firm was withdrawing Affidavits it had previously filed. The Affidavits were signed by Jeffrey Stephan of GMAC Mortgage/Homecomings Financial in Montgomery County, PA. Stephan had previously admitted in depositions that he signed thousands of such affidavits each month with no knowledge of the contents and in many cases without even bothering to read the Affidavits. In the Notices, Florida Default claimed that “the undersigned law firm was not aware” that the Stephans Affidavits were improper and had a good faith belief in the Stephans Affidavits. Stephans signed so many Affidavits, however, on behalf of so many different securitized trusts, that his lack of actual knowledge should have been obvious. Many other mortgage servicing companies and foreclosure firms have filed thousands of other worthless, unfounded Affidavits. Perhaps the Law Offices of Marshall Watson will notify courts that Lost Note Affidavits signed by Linda Green, Tywanna Thomas and Korell Harp are also improper; perhaps The Law Offices of David Stern will notify Courts that their own office manager, Cheryl Samons, had no knowledge and did not even read the Affidavits she signed. The dark days of the foreclosure “robo-signers” seem to finally be coming to an end in Florida. Will the same judges who accepted thousands of these worthless Affidavits now believe the allegations that the foreclosure law firms acted in good faith when they presented these documents to Courts? An example of the Notice filed by Florida Default is available in the “Pleadings” section of this site. Highlights from the deposition of Jeffrey Stephan are available in the “Articles” section. Scott Anderson, Bryan Bly, Margaret Dalton, Erica Johnson-Seck, Crystal Moore and the other professional signers may finally be held accountable for their sworn false statements.

I’m also told that an Mortgage Bankers Association conference which is in progress, is “freaking out” over this. Um, how could they not know this dead body was in the room?

This analysis from Jasraj Vaidya at Barclays via Brian C (no online source). As this alludes, this has the potential to extend/derail foreclosures and potentially increase loss severities. Moreover, the evidence is mounting that documentation fraud has become widespread, if not pervasive, because the securitization machinery effectively broke down on the back end (the steps necessary to get the note, the borrower’s IOU, into the trust, were not completed, and after the fact forgery is used to create a legally acceptable paper trail).

It was reported on Bloomberg today that GMAC has sent a memo to all brokers suspending all foreclosure activity against delinquent borrowers in 23 states…

Most likely an issue with judicial states

Using publicly available data from HUD and RealtyTrac, we have created a list of judicial foreclosure states. These are states where judicial foreclosures are most common and in which the lender has to appear before a judge and obtain a court order before initiating foreclosure proceedings against the delinquent borrower. Such states tend to have much longer foreclosure timelines than non-judicial states. What is striking about the list of states in the GMAC announcement is that all but one (North Carolina) are judicial states. Also, all judicial states in the country but one (Delaware) are in the GMAC list. This would hint at some potential issues with judicial states that is driving the GMAC directive.

A recent news report provided some hints at the type of issues with judicial foreclosures that servicers may look to avoid before it become a larger issue. The Florida Attorney General recently announced an investigation of the three largest foreclosure law firms in the state. These firms represent the lenders, and there have been question about claims of note ownership put forth by these firms during foreclosure
proceedings. A clean record of note ownership is lost or hazy in many cases, due to multiple transfers of the notes. The moratorium can be an attempt on the part of RFC to ensure that the process does not have significant flaws that can leave it open to legal action in the future.

At this stage, we are unable to ascertain what that exact issue might be. What is certain is that foreclosure timelines in those states for GMAC loans will be extend further, potentially adversely affecting their eventual severity.

Can it also be a lawsuit in the making?

Given that the directive spans multiple states, and given previous experience with Countrywide, there is always the possibility of some multi-state settlement in the works for various disclosure issues with
lending practices. However, we found some major omissions when we compared the list of states in the GMAC announcement with those involved in the Countrywide announcement. California, Nevada and Michigan – three states with significant mortgage volume, as well as distressed mortgages – are missing from the announcement. This makes us a little skeptical whether this is indeed a class action lawsuit in the making on the lines of the Countrywide one. On the other hand, the Countrywide list ballooned from 11 states initially to 42 states and DC finally, so one cannot yet rule out multi-state action. However, given greater evidence about judicial states, we still believe that to be the primary driver of
this directive.

Topics: Banking industry, Credit markets, Legal, Real estate, moral hazard

Chase Bank we not neogotiate a deal with me so I expect to lose my home in two months, I'm fine with it but I'd like to have three more months to local……The house is only going to sit empty any way..

They are hurting more than helping right now for sure!

Sit tight B and insist on more time when they offer cash for keys. Also, check your NOD filing and foreclosure filing. If it has MERS on it, you can fight and win! They have no right to foreclose and it could tie up your situation indefinitely.

Yeah, some of GMAC's employees in-charge of supervising short sale are reluctant to help.  I've been working with a short sale for about a year.  The negotiator has dragged his feet.  Finally, issued an approval on the short sale months after we had submitted an offer.  We're in the process of closing this transaction but we're facing a trustee sale on Friday.  The negotiator knows that we have a able and willing buyer but refuses to obtain an extention.  We only need a few days to obtain the loan for the buyer and get all HOA docs.  Unfortunately, the negotiators lacks interest in saving GMAC the extra cost of performing foreclososure.  If foreclosure is allowed to proceed the home will remain empty for a few more months and they will need to pay the borrower (cash for keys).  It's insane that the negotiator is unwilling to give us a few more days to close this and have this done with in less than 30 day.  They rather spend more money and time with the foreclosure.  Doesn't make sense.