Judge makes it difficult for ResCap to escape foreclosure reviews
A bankruptcy judge created a new hurdle for Residential Capital this week after he ruled the court would not let ResCap automatically suspend its efforts to find borrowers who were damaged by certain foreclosure processes. Instead, Bloomber says the judge is forcing ResCap to consult with federal regulators first.
Residential Capital LLC should try to negotiate a new foreclosure-review process with federal regulators before seeking a bankruptcy court order to halt the $300 million program, a judge said.
U.S. Bankruptcy Judge Martin Glenn in Manhattan told ResCap today he wouldn’t rule immediately on the company’s request to suspend its obligation to find any damages suffered by borrowers who went through foreclosure. ResCap, through its GMAC Mortgage unit, agreed to the review under a settlement with U.S. regulators before filing for bankruptcy last year.