Bloomberg: Ally Financial Mortgage Head Says Foreclosure Process Flawed

Ally Financial Mortgage Head Says Foreclosure Process Flawed

By Lorraine Woellert and Clea Benson – Nov 17, 2010 1:44 PM MT Wed Nov 17 20:44:23 GMT 2010

Ally Financial Inc.’s handling of documents used to seize homes from delinquent borrowers was flawed and “unacceptable,” the bank’s top mortgage executive said in testimony prepared for a congressional hearing.

Affidavits were signed “outside the immediate physical presence of a notary and without direct personal knowledge of the information in the affidavit,” Thomas Marano, Ally’s chief executive officer for mortgage operations, said in comments to be delivered at a House Financial Services Committee hearing on foreclosures tomorrow.

“Our company’s process for preparing foreclosure affidavits was flawed,” Marano said in the statement. “These flaws are entirely unacceptable to me.”

Ally’s GMAC Mortgage unit halted evictions in 23 states in September and is reviewing foreclosures nationwide in response to questions over the handling of legal documents. Attorneys general from all 50 states are investigating mortgage lenders and servicers after revelations that banks may have acted illegally in using so-called robo-signers to validate documents without reviewing the underlying facts.

Marano said Detroit-based Ally has “resumed foreclosure sales only after an individualized review of each case.”

Lawmakers are questioning regulators and banking officials about what actions they have taken to ensure that foreclosures were fair and legal. Executives from Bank of America Corp. and JMPorgan Chase & Co. were questioned by the Senate Banking Committee yesterday. Regulators, including officials from the U.S. Treasury Department and the Federal Reserve, are scheduled to testify at tomorrow’s hearing.

Routine Examinations

The Office of the Comptroller of the Currency, the Treasury unit that regulates national banks, didn’t discover flaws in mortgage foreclosure documents before they were disclosed in September because its routine examinations don’t include reviews of paperwork until there are warning signs, Acting Director John Walsh said in prepared remarks.

“Examiners generally do not directly test standard business process or practices, such as the validity of signed contracts, or the processes used to notarize documents or the actual physical presence of notes with document custodians, unless there is evidence of a material weakness or breakdown in governance and internal controls,” Walsh said.

Regulators including the OCC are now conducting on-site examinations of foreclosure practices and documents, he said.

The review, a joint effort of the OCC, the Federal Reserve, the Office of Thrift Supervision, and the Federal Deposit Insurance Corp., will be completed in January, Federal Reserve Governor Elizabeth Duke said.

“We are prepared to take supervisory action where necessary and appropriate to hold institutions accountable for poor practices,” Duke said in her prepared remarks.

To contact the reporters on this story: Lorraine Woellert in Washington at; Clea Benson in Washington at

To contact the editor responsible for this story: Lawrence Roberts at

11 Responses

  1. i’am the key, to unlock this mess, i can bring all the proof needed

  2. Zoe,

    Supposedly this is something that can be addressed in BK court.

    I have an even more ridiculous copy of the note that was submitted to the BK court as part of the proof of claim: They presented a copy obtained from the Title company. It is even CLEARLY MARKED as a copy from the Title Co.

    Since the title company is one that only keeps scanned copies, they scanned an early version of the note that had NO assignment on it. Now, with the recent request, they printed out a copy of that original note from their file system.

    It is MEANINGLESS as far as proof of ‘holding’ the note. It proves nothing about how the current claimants came to hold any interest.

    So, this copy of a copy that is obviously NOT the actual note is RIDICULOUS!

  3. You would think that these companies would embrace a change agent. The Six Sigma process-improvement methodology started with Motorola in 1986 and has yielded the company over $17B in process improvements ever since including their services division. In the five years from 1995 to 2000, another bellwether, GE, embraced Six Sigma practices and realized benefits of over $10B including Capital Services which is a diversified financial division of GE that offers comprehensive solutions to clients to help them increase productivity and efficiency. They specialize in foreclosure, financing and insurance, offering a remarkable variety of services globally. GE Capital Services’ commitment to using Six Sigma Breakthrough Strategy to reduce defects, control quality and increase customer satisfaction is unparalleled in the service industry. In fact, GE Capital Mortgage Insurance won the USA Today Quality Cup in 1998 for service businesses. These two companies and the thousands of others that have successfully implemented and utilized Six Sigma to improve their organizations are testaments to the fact that the methodology does work and can prove quite beneficial to a service business.

  4. Actually, since the pretender/lenders do not own the loan and never did own it, the foreclosure actions need to be dismissed. The real owner can step up to the plate. Unfortunately, for the entirely illegal system of MERS and securitization the note and mortgage have been separated, and the real owner(s) probably owns your living room and another owner owns your kitchen if it even can be determined. In addition, your house was probably sold at least 3 or 4 times and some poor investor got the shaft. You really don’t owe anything to anybody. Your house has been paid for. It is all a giant scam.

  5. WHY are judges allowing copies of the original notes? Seems to me that if judges refused cases without original notes and assignments, the FACTS would ooze out from everywhere. From what I read, lost notes should be the exception, not the rule. And strict requirements are to be followed to justify why a copy is presented.

  6. Kickboxer that only way I really see a national moratorium happen is if we have people who are making their payments send in a Qualified Written Report. So that the Deadbeat issue gets taken away. But the Investors who have money will do the work for us (again Money talks and b@##llSh#@t walks).

    Never Again.
    Achtung Deadbeats

  7. In my opionion unfortunately it is not about write or wrong it is about money. Money talks and b#$llsh#$$t walks.

    Bank of America bought Countrywide at probably pennies on the dollar or max 20 cents on the dollar. So Bank of America can afford to put a self imposed moratorium. or become the scapegoat.

    Does this make sense? and does anybody have any information on the how many foreclosures are being done by bank of america in the judicial states especially Florida?



    I am thinking of sending Mein Kampf to a few judges to read.

  8. @Thomas Moreno,
    If you are so appauled and you find your process “flawed and unacceptable”, my question is why did you only willingly halt the foreclosures in the states where you could be sanctioned with “fraud upon the court”??? HUH??? Those 23 states that you quit those foreclosures really do say a lot about how much unacceptability you are willing to accept……only those that will cause your attorneys sanctions and fines.

  9. I agree Kickboxer.

    What I find very interesting is that NO-ONE is ‘fessing up to the fact that there are situations where the assignments needed to properly securitize were never done and bogus ones were generated and recorded.

    Once they have done that, I do not see how they can straighten out the mess without the borrower agreeing to sign off on helping them clear the title.

    Most likely all the current cases of the bogus assignments being recorded will involve attempts to foreclose. So, why would a borrower in that situation help them undo their mess without compensation?

    We have heard the experts indicate that some if these cases can cause them to not have any way to foreclose. At best they can get a lien, but they do not have any power of sale.

    Of course they don’t want to publicise this part of the mess in any way that acknowledges the true situation.

    Currently in CA, the judges have not been paying any heed to these claims from borrowers. This may be changing.

    Also, the explanations from the ‘regulators’ do not make sense given that complaints were being logged and allowed to be responded to by the fox that was in the hen-house, i. e. the servicers or pretender-lenders were left to respond to the complaints.

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  11. This is exactly why we need a national moratorium now!

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