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Ally Won’t Stop Foreclosures in Minnesota, State Says

Oct. 12 (Bloomberg) -- Ally Financial Inc.’s GMAC Mortgage unit rejected a request to stop foreclosures in Minnesota pending a review of policies, the state’s attorney general said.

Ally last month stopped evictions in 23 states where courts supervise home seizures over concerns its foreclosure process may be illegal. Minnesota, which doesn’t require judicial action on foreclosures, wasn’t among them.

State Attorney General Lori Swanson on Oct. 6 asked GMAC to “temporarily suspend its foreclosures” pending a review of policies and procedures, she said today in a letter to U.S. Treasury Secretary Timothy Geithner. GMAC told Minnesota it “did not plan” to do so, she wrote. She asked the Treasury Department to press GMAC to expand the suspension of foreclosures to her state.

“In light of the sloppiness and lax practices that GMAC has shown in other states, I question how it can definitively attest to the accuracy of the information contained in documents used in foreclosures” in Minnesota, Swanson wrote.

“We’re requesting that the Treasury Department intervene” because GMAC is majority-owned by the federal government, Swanson’s spokesman, Benjamin Wogsland, said today in an interview.

Jim Olecki, an Ally spokesman, declined to comment on the letter.

“We have not halted foreclosures in any states but had suspended evictions and foreclosure sales in the 23 judicial states,” he said today in an interview.

Review of Procedures

The company has hired independent legal and accounting firms to review foreclosure procedures in all 50 states, he said.

Authorities in at least nine states, including Minnesota, have begun investigations into foreclosure practices at some of the nation’s largest lenders. A coalition of state attorneys general is planning to announce a multistate investigation tomorrow, according to Florida Attorney General Bill McCollum.

Swanson will join that investigation as well as continuing an independent probe, Wogsland said.

Bank of America Corp., the largest U.S. lender, extended a freeze on foreclosures to all 50 states Oct. 8 as concern spread among federal and state officials that home seizures are being based on faulty data.

JPMorgan Chase & Co. has also stopped repossessions is the 23 states with judicial supervision over foreclosures. Litton Loan Servicing LP, a mortgage-servicing business owned by Goldman Sachs Group Inc., said Oct. 8 it’s halting some foreclosures to review how they’re handled.

To contact the reporter on this story: Margaret Cronin Fisk in Southfield, Michigan, at

To contact the editor responsible for this story: David E. Rovella at

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