Industry NewsMortgage

GMAC Mortgage puts hold on many foreclosures, REO sales

Policy mostly in effect for 'judicial foreclosure' states

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GMAC Mortgage has temporarily halted foreclosure proceedings on homeowners in 23 states including Florida, New York, Illinois and Ohio in a "corrective action" that may also delay closings on some bank-owned (REO) homes.Closing dates on all REO sales will be extended by 30 days, with buyers having the right to cancel their purchase agreement and get their deposit back, Bloomberg News reported, citing a Sept. 17 internal company memo.With the exception of North Carolina, all 23 affected states are "judicial foreclosure" states, requiring lenders to obtain a court order before initiating foreclosure proceedings. That's led to speculation that GMAC Mortgage wants to make sure it can prove it is the noteholder on loans it forecloses on before initiating legal action.In some judicial foreclosure states, troubled homeowners have challenged lenders foreclosing on them to prove that they have a right to collect on the debt by producing a mortgage note.Because many mortgages...