Attorney General Martha Coakley urges Congress to investigate Ally Financial’s GMAC over foreclosure practices

Cites company’s $17 billion taxpayer-funded bailout

Massachusetts Attorney General Martha Coakley today urged US lawmakers to investigate Ally Financial Inc. and its subsidiary, GMAC Mortgage, for allegedly carrying out illegal foreclosures and submitting false documents related to property seizures.

Coakley made the request in a letter sent five days after she filed a civil lawsuit against GMAC Mortgage and four other major US lenders for alleged mortgage fraud in Massachusetts. Coakley said today that she is asking Congress to look specifically at GMAC because it is largely owned by the US Treasury, following a $17 billion taxpayer-funded bailout in 2008 during the nation’s financial crisis.

The letter was addressed to the chairs of the US Senate Committee on Banking, Housing and Urban Affairs and the US House Committee on Financial Services. Coakley wrote, “In light of Ally’s alleged deceptive and illegal actions against homeowners in Massachusetts and across the country, I respectfully request that your committees investigate Ally’s serious misconduct and consider what actions the federal government can take to ensure that Ally adheres to the law.’’


An Ally spokesman could not be immediately reached for comment.

Coakley’s letter escalates an increasingly heated dispute between the Attorney General’s Office and Ally Financial. In response to the lawsuit, Ally Financial said last week that the office will no longer buy mortgages from lenders and brokers in Massachusetts because of legal risks related to “recent developments.’’

“The federal government should not tolerate Ally’s serious misconduct and instead should hold them accountable for unlawful actions taken against borrowers,’’ Coakley wrote to federal lawmakers.

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