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Tuesday, September 21, 2010

GMAC Stops Foreclosures in 23 States

Zero Hedge has obtained the GMAC Letter referred to earlier by Bloomberg, and contrary to subsequent reports by the bailed out lender that this is merely a procedural adjustment, something does not add up. To wit, note statements such as:
Do not proceed with evictions, cash for keys transactions, or lockouts. All files should be placed on hold, regardless of occupant type.
Do not proceed with REO sale closings. GMAC Mortgage will communicate instructions to the assigned agent regarding the management of the properties in Pending status. If the contract has already been executed by both parties, the Asset Manager will request an amendment to extend the closing date by 30 days or as otherwise designated by the Asset Manager. Please provide appropriate notice to the REO purchaser that, pursuant to Section 1 of the GMAC Mortgage Addendum to Standard Purchase Contract, GMAC Mortgage is exercising its sole discretion to extend the Expiration Date of the Agreement by 30 days at this time. If the REO purchaser wishes to cancel the contract, GMAC Mortgage will terminate the Agreement and return the earnest money deposit.
And mostly: “There could be asset level exceptions and you will receive direct communication from GMAC on the handling of those exceptions.”
In other words, the new revision is the de facto new standard, and not the exception to the rule, as GMAC’s subsequent refutation would like to make it seem.
Why the sudden urgency? And why these 23 states in particular?
Once again, we welcome the ABA’s chiming in on this development which could do more to hurt the banking profession’s already abysmal reputation with the Main Street community than even the S&P hitting its fair value somewhere south of 400.

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