Connecticut Attorney General Richard Blumenthal has asked Ally Financial to freeze all home foreclosures within its borders, saying his office is investigating "defective" documents filed by the company and its mortgage division, GMAC.
Connecticut is the latest in a growing number of states that has either launched an investigation of Ally's foreclosure practices or soon will.
"I am demanding a freeze on all GMAC/Ally foreclosure actions to forestall horrendous, illegal harm against homeowners," Blumenthal said in a statement late Monday. "The GMAC/Ally foreclosure steamroller should be stopped so the company can be held accountable. My office has already confirmed that some defective documents were filed in Connecticut."
Among the AG's demands is a request for the company to identify employees or contractors who reviewed and signed Connecticut foreclosure-related documents and describe their relationship to the bank.
Ally's foreclosure problems became public last week after the company confirmed that it was halting certain foreclosures in 23 states due to processing and procedural mistakes.
Ally's mortgage unit, Residential Capital Corp., which also uses the trade name GMAC Mortgage, is facing court challenges on some of its foreclosures.
In a sworn deposition Ally employee Jeffrey Stephan admitted that he signed off on 10,000 foreclosure documents a month without reviewing them.
ResCap/GMAC ranks fourth nationwide among residential servicers with roughly $370 million in receivables.