This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Federal regulators have ordered Midvale-based Ally Bank to fix significant deficiencies in its foreclosure practices covering a two-year period in which among other things it submitted bogus legal documents for bankruptcies and other court actions.
The order from the Federal Reserve and the Federal Deposit Insurance Corp. alleges employees of Ally, two sister companies and their parent company, Ally Financial, signed foreclosure documents without reading them — a possibly illegal practice known as "robo-signing."
The Fed and the FDIC issued the order in April. It was made public Friday.
The employees "represented that the assertions in the affidavit(s) were made on personal knowledge or based on a review ... of the relevant books and records, when in many cases, they were not based on such knowledge or review," according to the order.
The infractions allegedly took place from January 2009 to the end of last year. During that period, Ally Financial, Ally Bank, Residential capital, GMAC Mortgage and a number of affiliated mortgage servicing companies completed almost 90,000 foreclosures.
Ally Financial spokeswoman Gina Proia said the company would not disclose the number of Utah foreclosures. Ally Financial and the subsidiaries intend to comply "fully" with the government's order, she said Tuesday.
Other than to say Ally Financial companies are still foreclosing on mortgages "when appropriate," Proia declined to elaborate. She said the company had expressed its reaction to the order in a statement issued in April.
In the statement, Ally Financial said it "deeply regrets the error in processing certain affidavits and has acted with urgency and rigor in addressing and remediating the issue."
The company said it had not found any instance where a homeowner lost a property without being in significant default.
Ally Financial, formally known as GMAC LLC, became a bank holding company after the federal government seized control of the former auto and mortgage finance business in late 2008. The change enabled the Detroit-based lender to qualify for a federal government bailout.
Its Utah-based banking arm, GMAC Bank, became Ally Bank in 2009. The name change was widely interpreted as an effort to distance Ally Bank from troubled GMAC, one of 10 financial firms ordered by the government during the financial crisis to raise more capital.
In the April order, the Fed and FDIC also alleged Ally and the subsidiaries filed affidavits and other mortgage-related documents in a number of state courts that weren't property notarized.
Lawyers for the companies allegedly made arguments in court during foreclosure and bankruptcy proceedings without always confirming that documents relating to homeownership were in order. The companies also initiated nonjudicial foreclosures with faulty documents, according to regulators.
The companies were also slammed for inadequate staffing and training of employees in light of an surge in foreclosures.
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A look at Ally Bank
Headquarters • Midvale
Operations • Ally does not maintain branch locations. It receives deposits, provides checking and savings accounts, and offers certificates of deposits through the Internet and by telephone.
As of Dec. 31, the bank had $33.9 billion in retail, brokered, mortgage escrow and other deposits.