GMAC Mugs Massachusetts for Insisting on the Rule of Law, Suspends Mortgage Lending in the State

This move by GMAC, now Ally, is remarkably brazen. GMAC has effectively said that Massachusetts must hew to its demands of how to deal with foreclosures. It announced it is withdrawing from mortgage lending in the state in an effort to bring it to heel.

GMAC may be in a better position to exercise this sort of threat than other banks. Full service banks have broader business lines, so government bodies in the state could retaliate by moving other business (pension funds, cash management, payment services) from them.

This is very similar to the retaliation described in Gretchen Morgenson and Josh Rosner’s Reckless Endangerment, when Georgia had the temerity to try to pass tough lending laws (emphasis ours):

Standard & Poor’s was the most aggressive of the three agencies, however. And on January 16, 2003, four days after the Georgia General Assembly convened, it dropped a bombshell. Because of the state’s new Fair Lending Act, S&P said that it would no longer allow mortgage loans originated in Georgia to be placed in mortgage securities that it rated. Moody’s and Fitch soon followed with similar warnings.

It was a critical blow. S&P’s move meant Georgia lenders would have no access to the securitization money machine; they would either have to keep the loans they made on their own books, or sell them one by one to other institutions. In turn, they made it clear to the public that there would be fewer mortgages funded, dashing “the dream” of homeownership.

It was an untenable situation for the lenders who had grown addicted to the securitization money spigot. With S&P shutting it off to abusive lenders, it was only a matter of time before the Fair Lending Act was dead.

To Brennan and other consumer advocates, it was a shocking and devastating moment in the battle against predatory lending. “We were stunned when we saw the press release,” Brennan said. “We thought, where does this come from?”

Standard & Poor’s said it was taking action because the new law created liability for any institution that participated in a securitization containing a loan that might be considered predatory. If a Wall Street firm purchased loans that ran afoul of the law and placed them in a mortgage pool, the firm could be liable under the law. Ditto for investors who bought into the pools.

“Transaction parties in securitizations, including depositors, issuers and servicers, might all be subject to penalties for violations under the Georgia Fair Lending Act,” S&P’s press release explained.

It ended with a warning: “Standard & Poor’s will continue to monitor this and other pending predatory lending legislation.” In other words, any states that might have been considering strengthening their predatory lending laws as Georgia did should beware.

GMAC is trying to get other big banks to follow suit. I hope the state and other groups that do substantial financial business with banks (largish churches are also attractive clients) make it clear than any effort to punish the state for enforcing the law will be met by moving their accounts to smaller institutions that respect the law.

From the Wall Street Journal:

GMAC Mortgage, the mortgage lender of Ally Financial Inc., is exiting the vast majority of its lending in Massachusetts a day after the state sued it over its foreclosure practices.

The nation’s fifth-largest mortgage originator said it “has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,” ratcheting up the high-stakes mortgage fight there….

GMAC Mortgage will stop purchasing loans from correspondent lenders and wholesale brokers, which makes up the majority of the company’s business. The lender said it was “disappointed” but that “it has an obligation to manage risks and deploy capital in an appropriate manner and in a way that protects the investment of the U.S. taxpayer.”

Get a load of the sanctimoniousness. Since when do the interests of investors trump the rule of law? In fact, the logic is backwards, since investors are not well protected in a regime where laws are not respected. Does anyone want to invest in, say, Somalia?

Reader MBS Guy notes by e-mail:

Ally will stop lending in the state. Now litigation costs are too high in Massachusetts, according to Ally Bank, which is 74% owned by the US Treasury.

This is a bit funny, since the lawsuit involves issues with loans which were originated and, generally foreclosed, in the past. Ally has said that they have fixed all of their robo-signing issues, so it shouldn’t be a problem for newly originated loans.

Given its ownership structure, is this a pissy message to Massachusetts from Ally itself, or from its majority shareholder for tanking the AG Task Force?

And get a load of this part by an industry mouthpiece:

“It also sends a signal to Massachusetts and other states that if you make it difficult for lenders to act they will take their business elsewhere,” Mr. [Guy] Cecala of Inside Mortgage Finance said of GMAC’s decision. “There is no law you have to operate in all 50 states.”

Sorry, for the first decade plus of the private mortgage securitization business, banks and servicers did hew to the requirements of state law. It was only in the late 1990s through 2004 or so that they started to fail to comply with the requirements of their own contracts (the breakdown appears to have taken place over time, with the biggest decay taking place during the 2002-2003 refi boom). That’s what has put their foreclosures on shaky footing, which in turn has led to wideranging legal abuses to get around the mess they created.

The insolence of the securitization industry continues to be astonishing. They act as if they have an imperial right to dictate to governments, and refuse to admit any role in a disaster of their own creation. I hope those of you who do business with Ally close your accounts immediately and tell the bank that it is due to their Mafia style move in Massachusetts.

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93 comments

  1. alex

    “GMAC may be in a _better_ position to exercise this sort of threat than other banks, since with their broader business lines, government bodies in the state could retaliate by moving other business …”

    Should that “better” be “worse”? Seems like Mass. has more ways to retaliate against GMAC, hence GMAC is in a worse position. Or am I just too tired to understand English sentences?

    1. Yves Smith Post author

      The line scans “their” = “other banks” so it is correct as drafted, but I agree it is not as clear as it should be. Revising.

      1. alex

        Dang, pronouns confuse me when I’m awake, let alone today. Nevertheless the revision is a good clarification.

    2. Tony

      But Ally is 75% owned by US government…

      isn’t there a law somewhere about federal government entity interfering with state ability to self regulate?

      GMAC is not a private company. legally it is owned by USGov.

      1. T.D.

        I read this the same way. Ally only exists because We The People bailed out GM and GMAC. Bankrate.com and other sources rate them 5-stars not because of their track record [bankruptcy!] because of the implicit government guarantee. They are THE MOST TBTF bank out there, because they’re already owned by the government, and government can’t afford to be seen as incompetent owners.

        So, to me, their announcement just looks like another cheap pressure tactic from the Feds toward the states’ AG’s who are not getting in line with the settlement package.

        1. kravitz

          sounds like the US Government doesn’t want to follow the rule of law, so it’s walking away from Martha Coakley and Massachusetts.

          Fleet Bank wanted to leave in 1993, when Mass sued for redlining checking accounts and mortgages. They chose to stay. (bought in 2004 by Bank of America.) It would, they determined, affect business in other states. Ally will need to come back, I would say. Other states will be thinking ‘Ally doesn’t want to follow the law? We’ll need to ask them to leave as well.’ Which won’t help the bank much.

          Memory Lane….
          http://repository.law.ttu.edu/bitstream/handle/10601/73/rice2.pdf?sequence=1

  2. alex

    What effect will this have on Mass. residents? There are still plenty of other banks. Is this anything more than a futile extortion attempt?

    1. Virginia - DeadlyClear

      Now c’mon folks – this is a bankster…they have not changed their ways. GMAC aka Ally will open another company in a new name to rake the money in (or partner with another crime family bankster for a whole new entity). So, feeble is this threat that it’s an obvious ploy to get press coverage for a failing bank and automobile company. If I lived in MA I’d produce a commercial, even if it could only air on the Internet, of all the reasons I would never by a GMAC car or mortgage (showing all the assignments of fraud) and make it appeal to the next 3 generation – at least!

  3. Richard

    Yves,

    Great post.

    GMAC/Ally needed to be called out for this action.

    As for Mass. residents, there are plenty of options for mortgage loans. For example, BofA is not going anywhere as it has a very, very large Mass. based franchise from having acquired Fleet/Bank of New England.

    As a bonus, the CEO, Moynihan, lives in Wellesley Mass.

    The GMAC/Ally action is confirmation that the Mass lawsuits are going to uncover significant inappropriate behavior by the mortgage industry.

    With luck, the lawsuit might be the turning point in finally addressing the problems in the mortgage industry.

    1. EH

      If it’s anything like the auto insurance kerfuffle in California some years ago, where some companies decided not to offer car insurance in the state after some regulatory law was passed (sorry, no cite), it will make zero difference.

  4. bobh

    Always, we come back to the same tragic western movie. There was a moment in late 2008 and early 2009 when the outlaws were weakened and chastened and things might have been done to get them under control. Our newly-elected sheriff, who had promised to do this and had a mandate to restore law and order, winked at the outlaws and put their henchmen in charge of the treasury. Now the outlaws are back, shooting up the town.

    1. nonclassical

      Rock Ridge was never the same after Sheriff Bart pulled his
      own gun on himself…so say witnesses..

  5. JCC

    If MA has any sense, they should handle this the way my father did, “Don’t let the door hit you on the way out.”

    1. Rcoutme

      As a resident of Massachusetts, I object. Please let the door hit their collective backsides on the way out.

  6. aeolius

    e-mail sent to my senators
    This morning the Mass. AG Ms. Coakley announced the initiation of a law suit against robosigning and other mortgage fraud.
    This afternoon WSJ and Naked Capitalism ran pieces that GMAC (ALLY) announced that it was withdrawing services from Massachusetts. An obvious intimidation attempt.
    The extraordinary thing about this announcement is not only was GMAC massively bailed out, but is currently has some 74% of its shares owned by the US govt!!
    So at first blush it would seem that the US Gov’t is trying to punish a state AG for her audacity.
    Is this true or just very lax oversight by whoever manages that 74%. In either case3 it is a scandal.
    I suggest that the US Gov’t use its voting rights to dismiss the current GMAC management

    1. alex

      “I suggest that the US Gov’t use its voting rights to dismiss the current GMAC management”

      But it’s so anti-capitalist to have the mere owners of a business interfere with its management. Yeah, I’d love to see it too. And tell the “free enterprise” types that if they don’t like the government owners interfering with a business, then that business shouldn’t be run so far into the ground that the government has to buy a majority stake to keep it afloat. Even socialism for the rich has its drawbacks.

  7. TimmyB

    If my memory serves me correctly, insurance companies stated they would no longer write auto insurance policies in Mass. when Mass passed a “no-fault” insurance law.

    In response, Massachusetts stated that those insurance companies that refused to sell auto insurance would be prohibited from selling any type of insurance in the state.

    Problem solved. All the insurance co.s backed down.

    1. Anon

      Interesting, in the light of the debate over Hoppe.

      So here we have an actual example, in living memory, of an insurance GLO cartel that decided it didn’t want to write cover for a particular security issue.

      But how could that possibly be, Mr H?

    1. LeonovaBalletRusse

      Great idea, bmeisen: it’s time to turn tables. Let Massachussets show the way for *change we can believe in*, in a state bank putsch along North Dakota’s model, adapted state-to-state.

    2. Dave of Maryland

      I’ve been hearing that for THREE YEARS. And so far NOT ONE state bank has been founded.

      Plenty of studies and such.

      Talk is cheap.

    3. F. Beard

      The very idea of banks is bad. Banks allow some, the so-called “creditworthy” to steal purchasing from everyone else.

    4. CaitlinO

      Fantastic – gotta love it. And once the great commonwealth of Massachusetts has its state bank in place, maybe it can politely invite the other TBTFs under investigation to get the fuck out of town.

  8. PL

    GMAC’s breathtaking arrogance is exceeded only by the size of its delusion that it’s needed. The folks in Massachusetts can do without predatory loans (60% of GMAC’s mortgages were subprime,) junk fees, robosigned documents (Jeffrey Stephan!) fraudulent misrepresentations in securitization (Residential Funding & ResCap!!) and reckless foreclosures. So can the rest of the country. The sooner GMAC gets out of the mortgage business the better.

  9. robert

    I live in Mass. and have never voted for Martha Coakley. (I vote in every election) When I heard that she filed suit, I decided she will get my vote next time and I need to give her support. If she sticks to her guns I will probably help out in her next campaign.

    She is going to come under a lot of pressure from Beacon Hill to capitulate. Hopefully, she will get support from more than just me . . .

  10. PQS

    Wow – I can only think of what every RWer says every time the government decides to spy on us a little more:

    “If you don’t have anything to hide, {Ally}, then what are you worried about?”

    1. RobW

      I like adapting the right’s slogan re undocumented immigrants to the issue of big corporations flouting the rule of law: “What part of illegal don’t you understand?”

  11. Rehabber

    GMAC (Ally) should have been put down by the FDIC, instead of getting TARP’d. Why they were deemed TBTF I’ll never understand.

    What do they do when other fronts open in this war? Will they cease to lend in CA, NV, NY, and DE if (when?) those AGs enter the fray? That would have to be close to 1/3 of the nation’s mortgage origination business – they going to leave all that on the table?

  12. Schofield

    Is this a blatant example of Democrat Party corruption when the US Treasury has control of GMAC?

  13. Schofield

    Time for a State Bank of Massachusetts that will have some closer public accountability. Is Obama getting campaign funding from GMAC (Ally)?

  14. Maju

    Isn’t Ally (GMAC) owned up to 73% by the US Government? Shouldn’t therefore try to abide by the law even more than the rest of banks? Or am I being sarcastically naive?

    Whatever the case, why is Geithner trying to rally the banks against the law? How right am I if I consider that Timothy Geithner is acting as super-capo of the Financial Mafia not just in Europe (as Hudson denounced recently) but also in the USA?

    Why is not the personal and political responsibility of Timothy Geithner underlined in this article?

  15. particle61

    ~
    translation ‘if we cant break the law – we wont play’

    hooray for AG MA Coakley – call your AGO today and demand that they stop shielding financial crimnals & offering ‘get outta jail free’ schemes – demand that they stand up for their citizens and sue the banks now!

  16. Sleeper

    Folks this is the way the game has been played for some time now –

    The financial markets (banks, bond markets, traders, hedge funds) basically say ” If you don’t play by our rules which we can and will change at will we will freeze the credit market.
    In fact Mr. Bloomberg recently made just such a statement. And if memory serves this was a threat made during the 2008 crisis.
    So the State of Massachusetts has a few options –

    First and most likely the state could just roll over and play dead. There is a better than even chance that the feds will put the squeeze on Massachusetts to take this path.

    Second the state could simply say that “We understand GMAC’s position and we hope that they will take their business elsewhere.”

    Or the state could take the offensive and seek to investigate GMAC for criminal activities – wire and mail fraud, systematic fraud on the courts, and so on.

    In any case the state AG can expect serious pressure from the feds and the financial folks. If Mass takes a hard line and sticks to it this is the beginning of the end for the banks.

    1. EH

      If that’s the case, then we should be able to turn it around and boil those frogs right out of our lives. Maybe the slower this drags out, the more economic damage will be routed around.

  17. LeonovaBalletRusse

    ALERT: a “Wood Chip-Energy” company that was given a Six Million Dollar Grant has just gone bust.

    Does this scenario sound familiar? Solyndra?

    Is this the latest scam for laundering Payola to political contributors? This has been suggested, but WHO is looking into this seriously?

    Will we see more of these scenarios?

    1. LucyLulu

      That isn’t good news at all.

      Investing in renewable/sustainable energy technologies would be an excellent source of job creation and is an industry gaining lots of traction on a global basis. We should be investing in R&D on this front. But the negative PR associated with these pork investments is likely to kill any interest for pursuing legitimate ventures and missing a huge opportunity.

      We need to spend money to invest in R&D in general, and things like modernizing infrastructure, etc. But it needs to be spent smartly, not wasted or spent frivolously on legislators’ (or Obamas’) earmark projects.

      1. Susan the other

        R%D is one thing but a viable business model is another. With China providing hidden subsidies and maintaining a low-value currency there is little chance this company could survive to provide jobs here. It will move to China. Unless we fix our trade practices. Or maybe subsidize our own workers with health insurance and price controlled food and housing until the dollar is even with the renminbi.

  18. Ransome

    The remedy is simple, a non-profit State banking system. Invest locally. We are off the gold standard, no investors are necessary to demand profits or growth. Massachusetts can reap the benefits from taxation of in-State growth and job creation. This is a no-brainer.

  19. brian

    state needs to issue a release that says law enforcement agencies will give lower priority to crimes against their branches
    ya know like that call about a robbery
    we will be over in awhile

  20. psychohistorian

    I think that we can say now that more than the wheels have fallen off this decrepit socio-economic system we are forced to live under.

    It can’t disintegrate too soon for me, in spite of the associated pain for all. The longer we wait for this sickness to die, the more will be injured by it.

    Really, really, really sick people are running our world.

    1. LucyLulu

      If Treasury is the majority stockholder, it’s pretty clear that our little Timmeh is supporting the move.

      The free flow of funds is a one-way street from the people to the financial industry. The financial mafia sets the rules for how the rents will be extracted from the peasants. Simon Johnson, former IMF chief, wrote an excellent piece in the Atlantic about three years ago that described how our government had been captured by the financial industry.

      http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/

  21. readerOfTeaLeaves

    GMAC Mortgage, the mortgage lender of Ally Financial Inc., is exiting the vast majority of its lending in Massachusetts a day after the state sued it over its foreclosure practices.

    The nation’s fifth-largest mortgage originator said it “has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,”

    It doesn’t seem very smart for Ally to publicly admit that since they can’t lie, cheat, and steal the business model they were using is ‘no longer viable’.

    What a laughingstock.

    They think people can’t figure out that they’re basically saying unless they are allowed to make all the rules, including defining ‘fraud’, they refuse to play and they’ll take their marbles and pout?
    UNbelievable…!

  22. LucyLulu

    Brazen indeed.

    I suspect being only the fifth largest lender, and given the slow market, this will have little effect assuming it gains no larger traction in the wider marketplace. However, GMAC could be playing with fire. The states hold the right to determine who is issued license to do business in the state. GMAC has substantial insurance and auto financing lines of business, which I’d imagine are profitable for them, and the auto financing is certainly critical for the GM auto sales business. In addition, Coakley could examine Ally loans with particular scrutiny.
    Assuming Coakley is the vengeful sort, I think she could make GMAC’s life uncomfortable. This isn’t the home-buying frenzy that existed in 2004.

    In any case, if Treasury is majority stockholder, this speaks volumes (again) on the Administration’s position on the foreclosure debacle. Don’t expect any support for enforcing the rule of law, much less prosecutions, from the federal front. Treasury, and thus Obama, has certainly consented to this move. That leaves any enforcement to the state AG’s. Unfortunately, some state AG’s are working within statutory (and case law) frameworks which essentially tie their hands in terms of taking legal action.

    For example, a couple weeks ago, the NC Supreme Court affirmed the Court of Appeals’ holding that a lender does not need to present the original note to show that it is the note holder where the borrower plaintiff presents no evidence to the contrary. The case is Dobson v. Substitute Trustee Services, et al. NC is a deed of trust state (non-judicial). In NC, mortgage assignments (DOT) need not be recorded, until foreclosing, with no intervening assignments required. Trustee asserts right to foreclose on behalf of note owner. In a nutshell, the NC Supreme Court ruled that the lender is not required to produce proof that they own the debt. Instead the presumption is that the lender indeed owns the note and the burden is upon the borrower to prove otherwise.

    http://womblencappellate.blogspot.com/2011/11/supreme-court-note-holder-need-not.html

    1. psychohistorian

      One might ask how this legal position makes any sense but in our new world order it seems clear that where rule of law is not trampled outright, it is severely bent to the purposes of power and money.

  23. Brian

    Let GMAC (ie Ally) and all the other banks leave the state. If the state of MASS is serious about this they can form a state bank, even a state central bank, to perform the functions of the said banks.

    Or if they don’t, sure there will be a rough period of transition, but if the state is serious they should should encourage small mortgage bankers that have been responsible to grow to fill the said banks’ shoes–however, many of the new regulator requirements and licensing fees are driving the smaller mortgage bankers under, as neither these new regulations and fee increases in any way affect the larger banks (that’s a problem that is never addressed by Progressives).

  24. ECON

    To this view from citizen north of the USA, an empire’s demise is from within from the corruption inherent in the political economy…. there is the irony that only from outside “the homeland” will America be subject to potential enemies…while the enemies of existence are inside and call themselves patriotic Americans.

  25. jonerik

    I’m not a “Tenther” but this high handed move by an instrumentality of the US Government sure looks like a usurpation of a state’s power and authority here, i.e. a violation of the Tenth Amendment.

  26. JC

    Do people invest in Somalia?

    In fact they do! You must have missed the stories of folks forming small funds that back piracy and other criminal enterprises in Somalia.

    There is great trade to be had in lawlessness. It’s why Big Business loves lawless places (see Iraq circa 2004).

    1. walter_map

      Where pirates have the power, piracy is always legal. Even where there are ‘laws’ and ‘heavy regulations’.

      Pirates don’t use guns and swords and ships with Jolly Rogers any more. They use corporate logos, private jets, and financial weapons. And sometimes squads of riot police and SWAT teams to touch up the geese.

  27. beowulf

    Interesting Steven Davidoff law review article:

    The Ally board of directors was increased to eleven
    members and the Treasury Department became entitled under
    the stockholders agreement to appoint six members of this
    board.
    There was no independence requirement for these direc-
    tors. The Cerberus affiliates and management also each des-
    ignated one director. The remaining directors were required to be independent and were designated by the other directors with a requirement that at least one Treasury Department nominee concur. The Treasury Department never established a trust to hold and vote the government’s ownership interest, despite the government’s earlier intimations. Indeed, the true control rights the government asserted over GMAC are unknown and the Congressional Oversight Panel (COP) has been particularly critical of the Treasury Department’s management of this investment.
    pg 21 of pdf.
    http://webcache.googleusercontent.com/search?q=cache:Ha7dIvW8qJwJ:www.minnesotalawreview.org/wp-content/uploads/2011/05/Davidoff_PDF.pdf+&hl=en&gl=us

  28. Bob of Newton

    Rightwingers: How do you feel when banksters go on strike? That is what Ally is doing, isn’t it?

  29. walter_map

    Well, yeah, sure, but then, GMAC is a bit player among financial firms. Goldman Squid would simply ramp up the machineries of coercion and continue business as usual without anything getting out to the public. GMAC is just whining because it lacks that kind of power.

    Massachusetts is playing a dangerous game. If this were the federal government they’d start making good on their threat to crash the economy.

    “I hope we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country.”

    – Thomas Jefferson.

    Don’t look now, but Jefferson lost.

    1. F. Beard

      Don’t look now, but Jefferson lost. walter_map

      We’ll all lose if that defeat is not reversed. This world is far too dangerous to play around with injustice.

  30. mollyg

    Massachusetts has plenty of small community banks – they even operate with integrity and abide by the state laws. Mass. residents should be applying for loans at these institutions as their first resort to begin with.

    1. mch

      We make our monthly mortgage payments to a local Savings and Loan here in MA, but they in turn make payments to… whom? Some entity to whom they’ve sold our mortgage, for all I know, to GMAC. From the Boston Globe (http://bostonglobe.com/metro/2011/12/03/gmac-stops-purchasing-mortgage-loans-mass/kjoGGK0kkC2sIxQug0ibqN/story.html):

      “A spokeswoman for GMAC’s parent, Ally Financial Inc., said GMAC will no longer buy loans that originated with other lenders and mortgage brokers in Massachusetts, but will honor all commitments made through Monday. She said GMAC will also continue to loan money to individual homeowners in the state, but that accounts for a small percentage of its business
      ‘Recent developments have led mortgage lending in Massachusetts to no longer be viable when you add litigation costs,’ Ally’s Gina Proia said in an apparent reference to Coakley’s legal action.
      Typically, GMAC buys mortgage loans from other entities, such as community banks, and then collects payments from those borrowers.

    2. mch

      We make our monthly mortgage payments to a local Savings and Loan here in MA, but they in turn make payments to… whom? Some entity to whom they’ve sold our mortgage, for all I know, to GMAC. From the Boston Globe (http://bostonglobe.com/metro/2011/12/03/gmac-stops-purchasing-mortgage-loans-mass/kjoGGK0kkC2sIxQug0ibqN/story.html):

      “A spokeswoman for GMAC’s parent, Ally Financial Inc., said GMAC will no longer buy loans that originated with other lenders and mortgage brokers in Massachusetts, but will honor all commitments made through Monday. She said GMAC will also continue to loan money to individual homeowners in the state, but that accounts for a small percentage of its business.
      ‘Recent developments have led mortgage lending in Massachusetts to no longer be viable when you add litigation costs,’ Ally’s Gina Proia said in an apparent reference to Coakley’s legal action.
      Typically, GMAC buys mortgage loans from other entities, such as community banks, and then collects payments from those borrowers.

      1. mollyg

        The community banks that I have had experience with remain the servicer for the life of the mortgage, regardless of whether the bank keeps the loan in its portfolio or sells it to another entity. The servicer for a mortgage is collecting payments and keeping track of all account records. Unlike the TBTF banks, the community banks do not pass along delinquent accounts to LPS or foreclosure mills.In the case of a foreclosure they work with local counsel.

        If borrowers are having trouble making payments, or there is a problem with their account, they have access to real and knowledgeable people, not an automated ‘customer service’ menu.

  31. LAS

    As I understand it, Ally Financial will continue to make mortgage loans directly in MA. What it will discontinue is the purchase of mortgages. Is this not more reasonable?

  32. indio007

    Being in and from Cambridge , Ma GOOD RIDDANCE.

    The Massachusetts housing market is still near bubble prices. We haven’t taken the hit other state’s have. So they have just shot themselves in the foot here.

    The funny thing is the rule of law that the AG is seeking to enforce is nearly 500 years old and practiced in every common law country. I don’t know where they think they are going to run to where the rules are different. If they are different they won’t be for long the reversion to the mean happens.

  33. thelonegunman

    Ehat do you expect? You’re dealing with a hedge fund: GMAC is owned by hedge fund behemoth Cerberus… ‘Nuffield said…

    Break up the banks.
    Bring back Glass-steagall
    Use the handcuffs and courts.
    Stop the criminal shit and crony capitalism.

  34. r stoltz

    Wait, by being critical of GMAC aren’t we slighting the gov’t, and wouldn’t we be considered terrorists under the new bill our sellout senators just passed?

  35. Pragmatic Realist

    I appears to me that we are in an all out war between Capital and the elected governments for control and sovereignty over the lives of people. I don’t think our formal political leadership has the courage or intelligence to win the battle for us. This is true here and in Europe where the Euro banks are demanding control over the various governments in exchange for “saving” them. What is it but war?

    1. MS G

      I read the article about the Dakota state bank. It makes perfect sense. Could the possibility of creating a New York State bank in the same mold be explored among the banking-literate folks in this NC community or any of its offshoots? Why can’t we create a blueprint for such a bank — have the paperwork and regulatory steps ready to go on a “turnkey” basis and apply for whatever charters are necessary? Would petitioning Governor Cuomo with such a proposal be the first step? Or one of our useless Senators in Congress?

      I’m dying to hear ideas about this. Even better, if one could organize across the country and co-ordinate applications to open state banks based on the no-interest model in the 49 states that don’t have them!

      I have a feeling this is a movement lots of people might support . . .

  36. Greg Marquez

    Kind of gives meaning to Proverbs 22:7(NIV) 7 The rich rule over the poor, and the borrower is slave to the lender.

    I guess it is incredibly redundant to say that GMAC and S & P are only able to do these things because Massachusetts and Georgia don’t have sovereign currencies, just like Greece, Italy, Spain, Ireland , etc.

    Also makes it pretty clear why lenders would oppose MMT and advocate instead for Balanced Budget Amendments or Gold Standards or other artificial constraints on Federal Government financing, all of which would give lenders the same power over the Federal Government that they now have over State and local governments.

  37. Ms G

    I read the article about the Dakota state bank. It makes perfect sense. Could the possibility of creating a New York State bank in the same mold be explored among the banking-literate folks in this NC community or any of its offshoots? Why can’t we create a blueprint for such a bank — have the paperwork and regulatory steps ready to go on a “turnkey” basis and apply for whatever charters are necessary? Would petitioning Governor Cuomo with such a proposal be the first step? Or one of our useless Senators in Congress?

    I’m dying to hear ideas about this. Even better, if one could organize across the country and co-ordinate applications to open state banks based on the no-interest model in the 49 states that don’t have them!

    Wouldn’t this be an initiative that lots of people might support? Starting with the constituency defined as “All Americans who have dealings with consumer credit” . . .

  38. Thomas McGovern

    Re: “This move by GMAC, now Ally, is remarkably brazen. GMAC has effectively said that Massachusetts must hew to its demands of how to deal with foreclosures. It announced it is withdrawing from mortgage lending in the state in an effort to bring it to heel.”

    I’m not trying to defend GMAC, but the logic of this first paragraph seems flawed. If GMAC leaves Massachusetts, they leave behind any profit they could have made in Massachusetts and they cede the Massachusetts market to other companies. What pressure is that on Massachusetts? How long would it take other companies to take up the slack caused by GMAC’s withdrawal?

    Since no one quoted in this article or any commentator has any knowledge of GMAC’s motives, it seems much more likely that GMAC has decided that it’s no longer a good business doing business in Massachusetts. After all, corporations don’t make profit by punishing their customers, and profit is what they’re after.

    1. Francois T

      “After all, corporations don’t make profit by punishing their customers,”

      Excuse me, but you are applying the logic of a fair and well regulated market.

      It has ceased to be so in the US for quite a while; Spell “BAILOUT after systemic fraud” if you’re not convinced.

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