WASHINGTON — Massachusetts Attorney General Martha Coakley, who last week filed a lawsuit against Ally Financial alleging that the firm pursued foreclosures illegally, is now asking Congress to investigate the firm's conduct.
In a letter to the chairmen of the Senate Banking Committee and the House Financial Services Committee, Coakley noted that U.S. taxpayers currently own 74% of Ally Financial, formerly known as GMAC, following a government bailout in 2008.
She asked the committees to investigate allegations of wrongdoing by Ally Financial and to consider holding hearings.
"The federal government should not allow Ally's serious misconduct and instead should hold them accountable for unlawful actions taken against borrowers," the letter stated.
The Massachusetts lawsuit alleges that in numerous instances, Ally Financial engaged in unfair and deceptive practices in violation of state law. For example, the complaint alleges that Ally Financial commenced foreclosures when it was not the holder of the mortgage, that it used robo-signed documents, and that it made misrepresentations about loan modifications.
A day after the lawsuit was filed, Ally Financial subsidiary GMAC Mortgage said that it would stop purchasing new mortgage loans in Massachusetts.
On Wednesday, Massachusetts Rep. Barney Frank, the top Democrat on the House Financial Services Committee, threw his support behind Coakley's letter, issuing a call for the committee to hold a hearing.