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Bar to GMAC/Ally Foreclosures Sought by Connecticut

Sept. 27 (Bloomberg) -- Connecticut Attorney General Richard Blumenthal said his office is investigating defective foreclosure documents filed by GMAC/Ally Finance Inc. and demanding that the company freeze foreclosures in the state.

“The GMAC/Ally foreclosure steamroller should be stopped so the company can be held accountable,” Blumenthal said today in a statement. “My office has already confirmed that some defective documents were filed in Connecticut.”

Blumenthal’s action follows news of investigations by Texas, Iowa and Illinois into mortgage practices at Ally. California ordered the company to stop foreclosures until it can prove it is complying with state law.

Ally, the Detroit-based auto and home lender, faces claims that its GMAC unit evicted people from their homes without first ensuring the borrowers were in default or the firm had legal standing to take possession of the homes.

GMAC Mortgage on Sept. 17 notified agents and brokers that it was suspending evictions in 23 states.

To contact the reporter on this story: Bob Van Voris in U.S. District Court in Manhattan at rvanvoris@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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