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Ally Financial Ceases Buying Loans in Massachusetts

""Ally Financial Inc."":http://www.ally.com/ announced Friday that it will stop buying new mortgage loans in Massachusetts, effective Monday, in connection with a spat of suits against it and four other big lenders the day before.

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The company will halt any purchases through subsidiary GMAC Mortgage, stanching origination activity with correspondent lenders and wholesale brokers.

""GMAC Mortgage has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,"" the company said in a ""statement"":http://media.ally.com/index.php?s=43&item=508, pledging that it will ""continue to service its existing customers and honor its contractual obligations as a servicer.""

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Gina Priori, a spokesperson for Ally Financial, chalks up the company├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós departure from Massachusetts to litigation expenses that make buying mortgage loans more prohibitive.

""The costs related to the mortgage business overall have increased, and when litigation costs are added to the equation, the business case in certain channels is no longer viable,├â┬ó├óÔÇÜ┬¼├é┬Ø she tells _MReport_.

On Thursday Massachusetts ""Attorney General Martha Coakley"":http://www.mass.gov/ago/ filed suit against Ally and four others ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô including Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô alleging that the lenders foreclosed on homes illegally and without mortgage notes.

""The single most important thing we can do to return to a healthy economy is to address this foreclosure crisis,"" Coakley said in a statement. ""Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law. Our action today seeks real accountability for the banks illegal behavior and real relief for homeowners.""

Ally Financial called the suit against it ├â┬ó├óÔÇÜ┬¼├àÔÇ£very disappointing├â┬ó├óÔÇÜ┬¼├é┬Ø in a statement Thursday, adding that it believes its subsidiary ├â┬ó├óÔÇÜ┬¼├àÔÇ£believes it has strong legal and factual defenses against these claims and will vigorously defend its position in court.├â┬ó├óÔÇÜ┬¼├é┬Ø

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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