GMAC's Full Letter To Agents... Something Does Not Add Up

Tyler Durden's picture

Zero Hedge has obtained the GMAC Letter referred to earlier by Bloomberg, and contrary to subsequent reports by the bailed out lender that this is merely a procedural adjustment, something does not add up. To wit, note statements such as:

Do not proceed with evictions, cash for keys transactions, or lockouts. All files should be placed on hold, regardless of occupant type.

Do not proceed with REO sale closings. GMAC Mortgage will communicate instructions to the assigned agent regarding the management of the properties in Pending status. If the contract has already been executed by both parties, the Asset Manager will request an amendment to extend the closing date by 30 days or as otherwise designated by the Asset Manager. Please provide appropriate notice to the REO purchaser that, pursuant to Section 1 of the GMAC Mortgage Addendum to Standard Purchase Contract, GMAC Mortgage is exercising its sole discretion to extend the Expiration Date of the Agreement by 30 days at this time. If the REO purchaser wishes to cancel the contract, GMAC Mortgage will terminate the Agreement and return the earnest money deposit.

And mostly: "There could be asset level exceptions and you will receive direct communication from GMAC on the handling of those exceptions."

In other words, the new revision is the de facto new standard, and not the exception to the rule, as GMAC's subsequent refutation would like to make it seem.

Why the sudden urgency? And why these 23 states in particular?

Once again, we welcome the MBA/ABA's chiming in on this development which could do more to hurt the banking profession's already abysmal reputation with the Main Street community than even the S&P hitting its fair value somewhere south of 400.

Full letter:


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zaknick's picture



About "Charlie" Munger's blatherings earlier:


"Before 1933 the people themselves had an effective way to demand economy. Before 1933, whenever the people became disturbed over Federal spending, they could redeem their paper currency in gold, and wait for common sense to return to Washington." - Howard Buffett, father of Wall Street legend Warren Buffett


How tunes have changed for these funny money billionaires.


Treason, plain and simple.

stollcri's picture

Are these two stories connected yet? I mean is good old Chuck worried about his banks having problems similar to GMAC's?

Fox Moulder's picture

Can anyone near Wall Street or the Fed building in DC report on the late night pizza delivery index?


A couple of years ago there were reports of all night meetings with the local pizza shops running out of inventory. Next thing you know a few large banks started to blow up.


ETA: Oops, hit the wrong Reply button.

Bob's picture

Perhaps those glossy prints of GMAC with their pants down were motivating them to hide their dirty laundry as long as they could, but once it hit the front pages they were "forced" to deny that it was them. 

"Those are not pictures of me--photoshop forgeries, I say!  Don't believe your eyes!"

BORT's picture

Priveledged, Confidential and Attorney Client Priviledge means a lot less these days.  This all seems very shaky and uncontrolled.  Any one care to comment on what this means to assets held on the balance sheeet of banks?

THE 4th Quadrant's picture

Previous transactions is the question. How many homes that sold over the last year will be disputed and renegotiated at a lower price.

Toxic inventory put back on the banks balance sheet?

Big Corked Boots's picture

When I bought the farm (literally not figuratively) I went with a lender that was known in the community for solid ethics and for not selling the mortgage to some other service/lienholder.

If I had gone with Vinnie Goombatz Funding then I would have one of these loans-in-a-knot and could skip payments without fearing my mortgage would actually be traceable back to me for ongoing payments.

Where's the upside for doing the right thing?

Bob's picture

Why are all the folks in good financial position pretending that they aren't better off than insolvent homeowners, regardless of "free rent"? 

C'mon, you're solvent, they're not.  You can get credit, aren't unemployed, no food stamps, etc.  Isn't that enough reward to keep the envy and resentment at bay?

For God's sakes.

Congrats on the farm.

Big Corked Boots's picture

I think the paradigm has changed. Why be proud of a credit rating when the very thought of obtaining something on credit is now absurd? Again, what's the advantage, in a world where everyone above you is waiting to stomp on you, everyone below you has a scam or an outstretched palm, and everyone alongside is trying not to step on a financial landmine. Life shouldn't be like this. This used to be America, where if you worked hard and got educated you moved up. Instead the middle class is just cannon fodder, and the poor are just leaches.

FWIW I'm massively underemployed and barely solvent.

Of course it could always be worse... but we should be looking up, not down.

Bob's picture

Sincerely agreed.  But the grass is certainly not greener below and it is better for us and others to keep that in mind. 

THE 4th Quadrant's picture

To some, doing the right thing is: saving, waiting for the downswing, and buying value (without credit).

nufio's picture

I would agree that you did not directly benefit from all the people buying mcmansions and lcd tvs with no income to show for it, but all that "growth" in the economy had some positive effect on your standard of living indirectly.
I am not defending their actions or blaming yours... but I think we all benefited to some extent in a very indirect way from the excesses of others be it, higher pay from employers, more profit from businesses, etc

Garth's picture

No.  This is ignoring what is unseen.

Instead of building all those unneeded houses, the effort/labor/thought/materals could have been spent building or discovering other things of more use.  But you don't see them so you don't miss them.

But they are missing...

In addition, it's going to cost a huge amount to clean up this mess and we are going to pay for that in other unseen things which won't happen.

All this talk of children paying for things is mostly an illusion -- we pay now by not having what we could have had now...



goldfish1's picture

When I bought the farm (literally AND figuratively) I went with a lender that was known in the community for solid ethics and for not selling the mortgage to some other service/lienholder.

Just thinking the same thing.


kengland's picture

From AP (LMAO because it's so freakin sick. Where are the pitch forks)

In a deposition taken in December, GMAC employee Jeffrey Stephan said he signed 10,000 affidavits or similar documents a month without personally verifying who the mortgage holder was. That means many foreclosures could have taken place based on false documentation. Stephan could not be located for comment.

"That's hundreds of thousands of cases," said Ice Legal PA attorney Christopher Immel who took the deposition. "And there are other people at other places who sign these kinds of documents as well."

Bob's picture

Am I gonna be the first to come out and just say what the vast majority of us know--backdating, falsifying paperwork, etc., is the norm in America.  Most of us are routinely expected to do it as "team players," i.e., a condition of keeping our jobs.  I just left mine due--in large part--to this. 

For the few who haven't done it themselves, you've seen it

Everybody knows this.  It's what makes the wheels turn. 

Rainman's picture

Yeeks. Amerika rolling along "normally" on a flatbed of larceny. Nothing new, but at least in the old days nobody ever wanted to kill the goose.

blunderdog's picture

Shocked, simply shocked, that there's, corruption, here in these great States of United.


unununium's picture

I have not done it or seen it in my own workplace.  I have only read about options backdating, morgage fraud, etc. in the paper and online. 

But keep telling yourself that if it makes you feel better.


Bob's picture

Hey, most of the people I've worked with--not in the real estate industry--couldn't see themselves that this is what they were doing. 

They were just expediently doing their jobs.  Like being "Good Germans." 

It is amazing what people can do without recognizing it themselves. 

Rainman's picture

Paychecks cause speech problems, hearing problems and blindness.....or so I am not told.

Handle with care's picture

There's an old quote which goes something like,"Its amazing what a man can fail to understand when his pay check depends on it."

It always used to confuse me, but now it makes sense

fxrxexexdxoxmx's picture

I quit within the hour when my manager instructed me to fill  out and sign as complete monthly inspections, prepaid maintenance contracts, that cost our customers on average $600.00 a month. That was in 1999. I was unemployed for 3 months without UE.

Doing the right thing is not always a choice. You are what you say and choose to do.

Bob's picture

Damn straight.  It ain't easy giving up the paycheck.  But what price do you place on your conscience?


RockyRacoon's picture

Maybe I am just naive, but GMAC (or anyone else for that matter) doing mass foreclosures doesn't look good politically.  Who is the major stockholder of GMAC?

Rainman's picture

The short sale realtors must really love this shafting !! And the prospective evictees celebrate !! 

I'm disappointed and confused that the Greatest Foreclosure State of Kalifornia never made the list.

BurningFuld's picture

Isn't GM a car company?? 

cossack55's picture

No, its a Federal sub-Cabinet Directorship assigned to the Treasury Dept.

New_Meat's picture

... er ... health care thang discised (sp?) as a car builder--don't cha know. - Ned

No One's picture

Corrective Action = Find out if we actually hold the note.

Attitude_Check's picture

Corrective action = Find out if anybody knows HOW to figure out WHO holds the note?  Or is the paper-work so bollixed that legal ownership has been lost, and the mortgage holder is actually squatting?

While you guy's are doing that - I'm finding countries that do not have extradition treaties with the US, and buying all the Gold I can with as much leverage as I can get - and packing my "bug-out bag".

monopoly's picture

Bob, that was a super post. Yes, we are solvent, we have little debt and pay our mortgage. It is so sad that so many in this country are in such a poor position. I have no regrets and wish all would be solvent.

Kudos to you sir.

Village Idiot's picture

"And why these 23 states in particular?"


Just a guess, but I recognize several of those States as having pretty severe predatory lending laws.

reading's picture

These are the judicial foreclosure states...

blunderdog's picture

Not to take this just a tiny bit seriously for a moment, this could turn out to be a very exciting week for thems of us who like betting over/unders on the FDIC Failed Bank Friday pools.

mynhair's picture

Steel bars, bitchez!

cougar_w's picture

Permit me to point out that any effort on the part of banks and the Feds to keep people strictly in their homes and on record for their loan -- paying or not -- would start out looking almost exactly like this.

Why would they do this? Because the wheels are fucking coming off.

The nightmare scenario is NOT that someone forecloses --  but that everyone forecloses. If not because they have no job, then because they may not have a job next month or because they are underwater on their loan or because they sense they can get away with foreclosing and living in the place for free.

The last three categories encompass just about everyone who didn't fall in the first.

If everyone forecloses, then the game is over. Just over. Homeowners bail, them as has keeps, and the Big Reset Button is pushed. 100 years later, everything is finally settled. In the meantime the realty and home loan industries entirely vanish from the face of the earth leaving not a single trace.

Not saying that is the case here. Just saying that if it was it would look just like this.

And a bunch of people with everything to lose would be shitting bricks and scrambling to fend off the greatest economic and financial meltdown ever seen evar.

Nathan Muir's picture

It is the case IMHO.  I have three friends who have recently (last 90 days) decided to default simply due to negative equity.  All employed.  One example - bought in 2005 for $210k, no cash down, interest only loan.  Current value is $140k.  He makes about $45k/year.  Told me it was just good business to walk away....and I agree.

Shameful's picture

Prisoner's Dilemma.  When one group starts to foreclose and push some of the garbage though the system it hurts the position of all the other trash holders, their trash is further devalued.  Short of a cabal to keep the housing off the market the trickle almost has to kick up as insolvent banks try to get something on their asset.  The only real answer for them is Zimbabwe Ben stepping in as the buyer of last resort, or Uncle Sugar buttressing them up.  Of course both "solutions" is really moral hazard writ large, and could bring down the support system.  Bubbles popping are a bitch.

On the bright side would be glad to see the mortgage industry die.  Then maybe Americans would actually save to buy a house.  And in the act of savings realize that the Fed is molesting them and maybe just maybe stand up to the Fed.

New_Meat's picture

yep, we're watching Jonny V. in action.


- Ned

themosmitsos's picture

Tyler, I believe it's related to the TYPE of Deed the Lender is taking possession of as a result of the foreclosure proceedings and hence later conveying through the REO as seller.

I know FOR A FACT in IL, Lenders in REO sales like to convey "indirect deeds" [Quit Claims/Deeds in Lieu/Special Warranty Deeds] rather than direct clean Deeds with unequivocal “free & clear title” and chain of title from them [Lender REO] to you [buyer], unless the buyer asks for, and is insistent in pursuing that, ie “Warranty Deed.” I've had RE deals go sour over REO dept's refusal to close my purchase at Chicago Title & Trust even when I'm offering to pay the $1k cost [I shit you not!], rather than some shady secondary Title Co … often the attorney’s. With this trick, usually and at minimum, they’re trying to fuck you on the back RE taxes.


In Illinois [everywhere] these types of Specially conveyed indirect deeds pass liability onto the purchaser because the Lender never FULLY took title but is ASSINGING you his rights. I've seen, for example, LONG after a case is closed, a defendant’s appeal filed & pursued, yes unsuccesfully, but against the NEW buyer as well as the Lender, post REO.

I know the GMAC situation is related to this because I can contrast this process w/foreclosure in Federal Court in Illinois, where the Lenders' REOs always have a DIRECT deed [Warranty] they're giving you as purchaser, not some form of title they're conveying to you.

Illinois State Law has very protective laws in place for individuals under foreclosure and State law is very sensitive to chain of title, title custody, and jurisdiction, while these are issues the while a step that 7th District Federal Judges scoff at. Lender’s claims to this effect [chain & custody] always suffice via the very existence of a loan.

I also know that Wisconsin & Indiana State Law in part have some of the same quirks/loopholes [on the list], and that Texas State Law does not [not on list].

Hence, I think it's related to the case where the servicer was found guilty of fraud, which sets a precedent regarding the establishment of chain of title & title custody, as it was also concurrent.

For ex, note that the States which do NOT recognize Special Warranty Deeds are not listed by GMAC


An example:

You have *NO* idea of the shit REOs try to pull. People are fucking retarded. Once at a closing I got into a 3 ½hr argument w/the Closer, Seller’s [REO] atty, AND MY ATTY because the fucking RASPA didn’t add up and $12,5k of my money was missing. I was right. This, at Chicago Title & Trust no less………The house I’m in RIGHT NOW writing this, I bought in foreclosure in 2002 and the Lender tried to fuck me on the taxes. SIX MONTHS *AFTER* closing, I found out the Seller [Lender/REO] had NOT paid [released] the $17k in back taxes held at the closing because the seller’s atty conveniently hadn’t filed the paperwork, and we needed to close that day. Closed where? TICOR/Attorneys' Title Guaranty Fund [I REALLY wanted the property]. Deed? Special Warranty. Where would the tax $$ go if not paid and unclaimed after 12mths? Back to the seller. They can’t pull this shit if they give DIRECT title [was special deed] and if they close for ex at Chicago Title, because then CT would be holding the $$ in escrow, and NOT ATGF.


Best I can do :)

To clarify: Leaves new buyer, and hence Lender's REO on countersuit, exposed to liability by/through this new precedent setting case. It is IRRELEVANT whether the porperty would've ultimately been foreclosed anyways. If they commit fraud on title, what about on resale value and equity for ex? Normally this might not concern their legal departments [probably would anyways], but the amount of cases we're talking about here is voluminous and the legal fees would be substantial even to prove themselves within their original rights.

williambanzai7's picture

I have one simple question: Why is it OK to bail out the shareholders and creditors of GMAC, but not OK to bail out GMAC's borrowers.

These are the kind of financial zen koans we are now forced to unravel in order to understand our corrupt system.

nedwardkelly's picture


Why bail out ANYONE? Whatever happened to accountability? Banks, individuals - no more f'ing bailouts.

stollcri's picture

That's right, help those rich, elite bastards close the door behind them.

They got their bailouts, the check cleared, and then helped stoke the "no more bailout" meme. Who really thinks that "Taxed Enough Already" movement was grass roots and not funded by wealthy individuals?

Of course we should be kissing their asses too, if it weren't for masters of the universe like Charlie Munger using government money to save us all we'd be wallowing in our own filth right now.

"Please, sir, I want some more."

FischerBlack's picture

Never one to pass up an opportunity for bad haiku:

Summer leaves turn brown

Ben rains money from the sky

GMAC dies