Posted on 13 Oct 2010
GMAC Mortgage, a unit of Ally Financial Inc., is conducting an independent review of foreclosures in all 50 states and examining foreclosure sales throughout the country to ensure procedures and documentation are accurate.
GMAC Mortgage was among the first companies to temporarily suspend evictions in the 23 states where court approval is required to foreclose. The new step involves "several legal and accounting firms" that will conduct "independent reviews" in all 50 states, but doesn't involve a halt of all foreclosures. A "specialized team" will look for errors in foreclosure-sale files nationwide, the company said.
The firms hired to conduct the review are Sullivan & Cromwell LLP, Bradley Arant Boult Cummings LLP, Morrison & Foerster LLP and PricewaterhouseCoopers LLP, said a person familiar with the matter.
GMAC Mortgage said it "has found no evidence to date of any inappropriate foreclosures."
Separately, Wells Fargo & Co. has initiated a review of all pending home foreclosures where affidavits are required, a spokeswoman said. She wasn't aware whether that review covers 23 states. It was the first admission from the San Francisco bank that it has taken additional steps in the wake of revelations that banks use so-called "robo signers" to approve hundreds of foreclosure documents a day.
Bank of America Corp. last Friday agreed to halt all foreclosures and foreclosure sales, the first bank to do so. Its review of all 50 states could be completed in a few weeks if all goes well, said a person familiar with the situation.
A Wells Fargo spokeswoman said the additional review began "around the first of October or the beginning of last week."
"Given the public debate, we felt like it was important to begin looking at this," she said. The bank, she added, wants to assure "customers" and "elected officials" that "we are doing all we can to ensure their affidavits are accurate."
The bank, she said, has no plans to call a nationwide foreclosure moratorium.
Big banks are bracing for new litigation resulting from the foreclosure furor. Bank of America has agreed to cover legal costs of title insurer Fidelity National Financial Inc. if any foreclosure errors emerge, and in exchange, Fidelity National will provide title insurance on sales of foreclosed properties.
A Bank of America spokesman said the bank is working with other title insurers on a similar agreement.
Fidelity National could also strike similar deals with other banks. "I expect this to become widespread to allow lenders to restart the foreclosures they have halted," a Fidelity National spokesman said.
The nation's largest title insurers—including First American Title Insurance Company, Stewart Title Guaranty Company and Old Republic National Title Insurance Company—are all involved in similar conversations with large lenders and regulators, said a spokesman for the American Land Title Association.
Banks are also bracing for a joint investigation among 40 U.S. attorneys general. People close to two banks said Tuesday they expect to negotiate with the prosecutors as a group.