The nation's fourth-largest mortgage lender informed brokers and real estate agents last week that it was suspending foreclosures due to legal paperwork that was rushed through the court systems of several states as the U.S. housing market tanked.
The New York Times said Saturday the unusual move by Detroit-based GMAC prompted lawyers for homeowners in Florida to prepare motions to have hundreds of foreclosure notices dismissed.
"Documents are submitted, and there's no one to really contest whether it is accurate or not," said J. Thomas McGrady, chief judge in Florida's Sixth Judicial Circuit. "We have an affidavit that says it is, so we rely on that. But then later we may find out that someone lost their home when they shouldn't have."
The Times said McGrady was of the opinion that GMAC was not the only mortgage lender that pushed through foreclosure cases.
The newspaper also said attorneys general in North Carolina and Iowa had started their own investigations into GMAC. California Attorney General Jerry Brown, a candidate for governor, called on GMAC to suspend foreclosures in the Golden State although foreclosure proceedings are not a judicial matter.