NEW YORK — Massachusetts Attorney General Martha Coakley is urging legislators to investigate alleged improper foreclosure practices by Ally Financial Inc., which said last week it would scale back most of its mortgage lending in the state.

Ally's announcement came after Coakley filed a lawsuit Thursday against the company and the four other largest mortgage servicers, accusing the companies of robo-signing, which involves employees signing documents without properly reviewing them, as well as deceiving borrowers about the availability of loan modifications.

A day later Ally said GMAC Mortgage, its mortgage-lending subsidiary, would stop purchasing new mortgage loans in Massachusetts that are originated by correspondent lenders and wholesale brokers. Ally blamed the move on "recent developments" that have "led mortgage lending in Massachusetts to no longer be viable."

Coakley, in a letter to Sen. Tim Johnson, D-S.D., and Rep. Spencer Bachus, R-Ala., Tuesday, urged the legislators' committees to investigate the alleged actions by the government-owned company. Johnson is chairman of the Senate Committee on Banking, Housing and Urban Affairs and Bachus is chairman of the House Committee on Financial Services.

"The federal government should not tolerate Ally's serious misconduct and instead should hold them accountable for unlawful actions taken against borrowers," the letter said. "I respectfully request that your committees investigate and consider holding congressional hearings on the matter."

An Ally spokeswoman wrote in an email that GMAC Mortgage is operating in full compliance with the law.

"Any suggestion related to past activity will be heard before the court, and we are confident in our ability to prevail," the spokeswoman wrote.

Ally hasn't found any instances in which it foreclosed on a borrower without being in significant default on their loan.

"It is regrettable that there is a call to spend additional taxpayer funds to further investigate this matter beyond the extensive and expensive investigations that have already been completed by numerous federal and state agencies," the spokeswoman wrote.

The company said in a filing with the Securities and Exchange Commission on Friday that the Massachusetts lawsuit will likely result in "penalties, sanctions, or other adverse actions, including monetary fines."

The lawsuit also named Bank of America Corp., J.P. Morgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. as well as the Mortgage Electronic Registration System, or MERS, as defendants.

Ally, formerly owned by General Motors Co., received $17.2 billion in bailout funds in 2008 and 2009. The company, which also offers auto lending and direct banking services, announced plans for an initial public offering earlier this year to pay back the government's 74% stake, but those plans have been on hold as it deals with repercussions from the housing bust.

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