GMAC Drew `False Testimony’ Sanction Years Before Eviction Halt


The sharks are circling. Industry practices for the past ten years have been based upon intentional misrepresentation. If their lips were moving, if they submitted a document, they were lying.

The lawyers, the banks and the individual people who signed any of these documents are in serious trouble along with those who witnessed and notarized their signatures. The people who prepared these documents face the worst consequences.

For those of you seeking payment of monetary damages remember that errors and commissions policies normally exclude intentional acts of fraud. So your claim should be based upon the gross negligence of the perpetrators rather than an intentional act if you want the insurance coverage. It’s not hard to allege that since they probably knew something was wrong but accepted assurances from people they trusted. Notaries and others involved in this process a re normally insured, at least up to a point.

AND the companies that employed them to notarize thousands of documents in blank are liable under a number of long-standing solid common-law theories of tort, breach of fiduciary obligation and other causes of action, many of which are covered by insurance as well.

GMAC Drew `False Testimony’ Sanction Years Before Eviction Halt
By Dakin Campbell and Lorraine Woellert – Sep 23, 2010 8:46 AM ET

Ally Said to Tell Freddie Mac of Faulty Foreclosures

Fannie Mae , the largest government-backed mortgage firm, said it notified lawyers of flaws in GMAC documentation after it was alerted. Photographer: Bradley C. Bower/Bloomberg

Ally Financial Inc.’s GMAC Mortgage unit, which suspended evictions in 23 states last week after finding employees didn’t verify foreclosure documents, was sanctioned in 2006 for similar practices, court records show.

GMAC gave “false testimony” when it justified foreclosures by submitting sworn affidavits signed by a mortgage executive who later said in a deposition she didn’t actually review the loan documents or sign in the presence of a notary, according to a 2006 court order filed in Duval County, Florida. In response to the sanctions, GMAC Mortgage directed employees to “read and fully understand” court documents before signing.

“Do not sign unless you have that comfort level,” said a policy directive from GMAC Mortgage’s James Barden, then- associate counsel for the legal staff. “It is the integrity of our cases that is at stake and we cannot afford anything less than full accuracy.”

GMAC Mortgage is facing new allegations in court documents that it evicted homeowners without verifying that borrowers actually defaulted or whether the firm had legal standing to seize the homes. Ally, the Detroit-based auto and home lender, said this week it found a “technical” deficiency in its foreclosure process allowing employees to sign documents without a notary present or with information they didn’t personally know was true.

Loan Industry

Ally declined to say how many loans may be affected. The firm, formerly known as GMAC Inc., ranked fourth among U.S. home-loan originators in the first six months of this year with $26 billion, and fifth among loan servicers, with a $349.1 billion portfolio, according to Inside Mortgage Finance, an industry newsletter. It’s also the beneficiary of more than $17 billion in U.S. bailout funds.

Servicers conduct billing and collections on mortgages, sometimes for other firms that actually own the loans, and handle foreclosures when borrowers default.

Gina Proia, a spokeswoman for Ally, confirmed that a policy directive was issued in 2006, “but we recently became aware of a breakdown in the process. The process has since been addressed and the prior practice is no longer taking place.”

Mark Paustenbach, a spokesman for the U.S. Treasury Department, which owns 56.3 percent of Ally, declined to comment. Kim Fennebresque, a director named by the Treasury to serve as an independent board member, didn’t return calls.

In a statement earlier this week, Proia said “the entire situation is unfortunate and regrettable and GMAC Mortgage is diligently working to resolve the situation,” and that “there was never any intent on the part of GMAC Mortgage to bypass court rules or procedures.” Florida was among the 23 states where evictions have been halted.


Lawyers defending borrowers have accused mortgage firms including GMAC and JPMorgan Chase & Co. of foreclosing on homeowners without making proper efforts to verify the accuracy of the documents. In foreclosure cases, companies typically file affidavits to start court proceedings. Affidavits are statements written and sworn in the presence of someone authorized to administer an oath, such as a notary public.

The 2006 case stems from a GMAC Mortgage foreclosure that began in August 2004 on a home owned by Robert and Lillian Jackson. The filing included an affidavit signed by a GMAC officer laying out the amount owed on the loan.

Florida Circuit Court Judge Bernard Nachman sanctioned GMAC in May 2006, saying that the company “submitted false testimony to the court in the form of affidavits of indebtedness.” The company was ordered to submit an explanation and confirmation that the policies were changed, and told to pay defendants’ legal costs of $8,135.55.

Legal Directive

GMAC’s legal department issued a statement afterward that told employees “not to sign verifications on court pleading documents unless you have independently reviewed and checked the facts.” The policy, distributed in June 2006, also stated in italics and boldface that employees should sign documents only in the presence of a notary. GMAC told the court four years ago that the policies were “being corrected.”

In December 2009, a GMAC Mortgage employee said in a deposition that his team of 13 people signed about 10,000 affidavits and other foreclosure documents a month without verifying their accuracy. The employee’s supervisor is the same executive sanctioned in the 2006 case.

GMAC’s internal review discovered the new discrepancies “a few months ago” and halted the practice, according to Proia’s statement earlier this week. Barden, who wrote the 2006 directive, and the two employees still work at GMAC, Proia said. Barden didn’t return a request for comment left on his work phone.

GMAC Impact

“They’re acting like this is a new problem,” said O. Max Gardner III, a bankruptcy attorney at Gardner & Gardner PLLC in Shelby, North Carolina, who isn’t directly involved in either GMAC case. “It’s the exact same thing,” Gardner said. “This is not just a GMAC problem. This is an industry-wide problem.”

Deborah Rhode, a Stanford University law professor and director of the school’s Center on the Legal Profession, said GMAC Mortgage’s behavior may amount to misleading the court.

“It’s not ‘technical’ when people attest under oath to knowledge they don’t have, and it doesn’t matter that in fact there isn’t actual error or discrepancy,” Rhode said. “Any court would take this very seriously.”

Judges could decide to dismiss the foreclosures, sanction the attorneys and company or levy a “substantial” financial penalty that would “get their attention,” she said.

The U.S. took control of Ally as part of a larger effort to prop up auto manufacturers. On a national level, regulators and lawmakers are trying to persuade bankers to avert foreclosures as seizures of homes by banks set records. Bank repossessions climbed 25 percent in August from a year earlier to 95,364, according to RealtyTrac Inc., the Irvine, California-based data provider.

To contact the reporters on this story: Dakin Campbell in San Francisco at; Lorraine Woellert in Washington at

To contact the editors responsible for this story: Alec McCabe at Lawrence Roberts at

20 Responses

  1. correction….reviewing, not haulting. Same deal as GMAC, they weren’t reading what they were signing.

  2. Matt Weidner has the CNBC video concerning JP Morgan Chase haulting foreclosures….

  3. Can any of you much smarter than me folks (all of you) weigh in on this statement?

    Karl over at wrote a piece recently where he states that if in fact the banks are forced into buying back the MBS, they would then be able to legally foreclose, as they’d now be the true holder of the note. Full article here:

    Any thoughts? Isn’t there a problem with assignment?

  4. The “dividend” due investors are consideration for the stock certificates they purchased. The stock was constructed from theownership of whole loan assets. these loans are transfered into a “Shell” to orchestrate a sham sale’

    In accountinats definition the assets loans are capitalized as paid in Capital. The loans are substituted as contribution at mark to market value.

    Its due exchange of consideration and or loss of the form and substance for whcih the lender relys uponn to foreclose.

    Here is the beggining of a long journey into accounting and scurities night of the living dead.


  5. |||||||||||| FORECLOSUREBLUES ||||||||||||

    You Posted on your Site:
    Posted on September 29, 2010 by Foreclosureblues

    I left a Reply …………

    Leave a Reply

    Name *


    May we please have a LINK to this ANNOUNCEMENT?
    It is NOT showing up in Google as yet?

    Link at your site would be HELPFUL.

  6. ************* BREAKING *************

    Posted on September 29, 2010 by Foreclosureblues


  7. M.Soliman,

    No one is suggesting an under-cover fashion. Questioning the ethics – and, since many law firms are “debt collectors” – whose fee is tied to collection – a possible financial incentive.

  8. As to your response to Jose Semidey – I have a concern. Many of the attorneys that claim to represent certain parties – may not be actually representing those parties – but, in fact, undisclosed parties



  9. There is no Great Recession but only “the Great Domestic Deceit that was instigated by the US Government namely Phil Graham, Bill Clinton, Alan Greenspan and G.W. Bush. Atrocious crimes committed by Wall Street and US Banks and inflicted upon innocent US Home owners….

    But yet the real criminals continue to place blame on the home owner. They claim no wrong doing and offer no resolve. The cover up continues and more foreclosures will follow.

  10. Neil Garfield,

    As to your response to Jose Semidey – I have a concern. Many of the attorneys that claim to represent certain parties – may not be actually representing those parties – but, in fact, undisclosed parties. While this may not be an action against those attorneys – certainly, it is a cause for alarm. But. I do not see how investors may have may have actions actions against these attorneys, and/or the intermediary securitization players – and victims have no recourse.

    Any legal actions against attorneys is not usually well received in courts. However, are there not ethics involved? And, financially, many of these law firms may be far more involved than anyone knows.

    Believe this is a very serious issue – and may be far more widespread than many believe.


    this comment by mother jones reader “jesse” i pasted @ the bottom of the page brings a more focused view of why is this foreclosure mess is taking place..

    Great story, but the rabbit hole goes deeper than this…..

    Americans paid for the bailouts, we are the investors in Freddie so there are legal issues here and the homeowners do have sollutions but most are afraid to sue the government.

    At the end of the day our research proves that at least in Florida the court houses are corporations that can be found easily on Dunn and Brad street and this does apply to every court house nation wide. This alone concerns me as they are for profit corportations. Anyone can get a financial statement from their Secretary of States and they will show that these corps are heavily invested in MBS (mortgage backed securities), meaning the judges retirments depend on us loosing our cases and keeping the value of these toxic securities for as long as possible.

    A request on my particular judge shows he was heavily invested in BOA yet BOA is suing me, I easliy had him recused. The whole system is invested in the banks and until Americans start suing back for the fraud, due their dd on the judges, and dd on the court houses, they will continue to rape and pilidge the American people. Americans need to fight back and it starts with suing the government, their employees, and their corporations, at the end of the day Americans are supposed to be the ones who own all of these…..aren’t we?

    Its a sad fact but at the end of the day its reality, no matter what we do there is no turning around. The economic status of our once great Nation is toast. We owe the world too much, we have screwed the rest of the world, and now who is left holding the bag…..Americans.


  12. foreclosurefight,

    DocX may be gone but isn’t their parent LPS? I’d start with them.

  13. S – E – V – E – N

    Colorado Joins States Ordering Freeze On Foreclosures By Ally

    Colorado Attorney General John W. Suthers ordered Ally Financial to halt home foreclosures in the state, following similar actions by Connecticut and California.

    In a letter to the company dated Monday, Suthers said lawyers for the company’s GMAC mortgage unit made claims about unpaid loan balances and ownership of the mortgage that are in question after the company admitted last week that some documents contained “important but technical defect.”

    “[T]he accuracy of these documents is essential for preserving the integrity of the foreclosure process in Colorado,” Suthers wrote.

    Ally confirmed early last week that it had halted evictions and sales of repossessed properties in 23 states after learning of the document processing issue. Those 23 states require a court order for foreclosures to proceed. Colorado was not the in the initial list.

    Connecticut and California have also asked Ally’s GMAC mortgage unit to halt foreclosures, while Texas, North Carolina, Iowa and Illinois are investigating the company’s lending practices.

  14. Jose Semidey on Malpractice: Yes as to the professionals that gave opinions or did work in connection with the borrower’s closing like the appraiser, title agent, trustee, mortgage broker, etc. Maybe as to the intermediary securitization players who were pretender lenders, aggregators, trustees etc. and NO as to the the lawyers representing the pretender lenders, as at least in terms of the borrower making any claim. The investors might have stronger actions against those lawyers and the intermediary securitization players.

  15. dear Mr. Garfield,

    Does this fraud and intent to conceal, misrepresentation and criminal activity represent malpractice as well?

    If we go after the predatory criminal element foreclosure mills regardless of who they are based on the facts that are now public and notorious, can that make it almost impossible for them to practice?

    What about judges, what is the process to file grievenaces or to ask for recusal from these judges that are stomping on our rights to due process?

  16. I will be on the radio tomorrow in an interview in Spanish on WCTN 950 Am in Washington DC. They called me because almost two years ago I declared on one of their shows about this fraud mess and now they want to touch base again. Let us see if I can stir the port

  17. They may have shut down, however, they may have come out under a different name. If they filed for BK there must be a liquidation trust somewhere.

    I can guarantee you the aliases you mention are still being used somewhere in America.

    File grievances and errors and omission claims, let the defendant do the work for you!

  18. ANOTHER GREAT FIND.`ased-home-foreclosures-on-faulty-court-documents-lawyers-claim.html

  19. How do you go after DOCX/Linda Green/Tywanna Thomas/Korell Harp when this company was SHUT DOWN AND CLOSED!!!

    How do you go about deposing them and bringing them into a suit…where can they be found now???

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