Thomas Marano, chief executive officer of mortgage operations at Ally Financial (GJM)
, said the way his company prepared foreclosure affidavits was flawed, and they have taken measures to review foreclosure sales in all states, according to written testimony prepared for a hearing before the House Financial Services Committee Thursday.
Ally, along with Bank of America (BAC)
, JPMorgan Chase (JPM)
and other lenders began review their foreclosure processes as employees allegedly signed affidavits without reviewing documentation. The controversy sparked an investigation from 50 state attorneys generals and 11 federal regulators.
"These flaws are entirely unacceptable to me," Marano said. "I directed my management team to devote whatever resources are required to correct these flaws and bring integrity back to the foreclosure process."
Ally is resuming foreclosure sales on a case-by-case basis and has implemented a new process that reviews all pending foreclosure sales going forward within seven days of the scheduled sale. An internal quality control team independent of the foreclosure department will conduct the reviews, Marano said.
Ally has also employed mortgage counsel and the auditing and advisory firm PriceWaterhouseCoopers
to conduct a review of its policies and procedures.
Ally's GMAC Mortgage
employees 120 full-time employees and 27 contractors and refers loans to foreclosure in nonjudicial states when the loan is at an average of more than 160 days delinquent. In judicial states, where most of the robo-signing problems have shown up, foreclosures are completed on Ally's borrowers when they are at an average of 425 days delinquent, Marano said.
"The foreclosure process is a lengthy procedure, which does not get initiated until after many months of delinquency, default and when all loss mitigation efforts have failed," Marano said.
Iowa Attorney General Tom Miller, who is heading up the AG investigation, said Wednesday that a fund to compensate victimized homeowners has been put on the table
, but a deal is a long way off.
"We're still trying to get a handle on the extent of the problem," a spokesman in Miller's office told HousingWire. "We're going to take all the time we need."
Write to Jon Prior