Following yesterday's announcement that the state of Massachusetts would sue 5 mortgage lenders among which the bailed out subprime failure formerly known as GMAC and now known by the much more idiot-friendly name "Ally", the latter has decided to take matters into its own crazy hands and escalate matters by confronting the entire state of Massachusetts in a move that will generate even greater anger among the broader population, aimed squarely and rightfully at the banks all over again. In an email sent out today, GMAC Bank said it would "no longer accept new locks for properties located in the Commonwealth of Massachusetts." The reason given: "This change is necessary due to the complexity of transacting business in an increasingly difficult legal environment in Massachusetts." By complexity GMAC of course means being confronted with Attorneys General who refuse to be pushed over or jump when the banking cartel says so. In essence, GMAC (with other lenders likely to follow suit) has decided to boycott states that dare to break away from the settlement talks and to pursue unilateral action. Alas, since pretty soon every state will be suing the banks now that the Nash Equilibrium of the settlement negotiations has collapsed and it is every state for itself, GMAC better figure out a way to make money doing something besides lending as very soon the "legal environment" in every state is about to get "increasingly difficult."
Naturally, MA AG Martha Oakley had some choice words for GMAC in the aftermath of this idiotic announcement. From the WSJ:
Ms. Coakley, responding in a statement to GMAC's move, said in order to do business in the state GMAC has to follow the law before foreclosing on homeowners. She said she was looking to hold the lenders accountable for actions and enforce the strict foreclosure laws in the state. "With today's action, it appears GMAC has acknowledged it has a problem following those laws and being held accountable for doing so," Ms. Coakley said. A spokeswoman for Ally wasn't immediately available to respond to Ms. Coakley's comment.
As a reminder...
The Massachusetts civil suit, filed in Superior Court in the state's Suffolk County, alleges that the banks' foreclosure practices were unlawful and deceptive. The suit, which doesn't specify damages, contends the banks—Bank of America Corp., J.P. Morgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally—charted a "destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law."
The banks have in the past acknowledged problems with their foreclosure processes, but said they haven't found anyone who was wrongly foreclosed upon.The robo-signing practice involves people who allegedly signed many foreclosure documents without properly reviewing them.
Yet mortgage lending is merely a small portion of GMAC's book, which prides itself in lending out subprime loans to GM car buyers.
The mortgage business, a much smaller portion of Ally's total revenues than auto lending, forced a $471 million write-down in the third quarter because of historically low interest rates
We can't wait to discover how long it takes before comparable robosigning practices are discovered when it comes to car loans for GM's NINJA customers, and the 74%-government owned lender is forced to stop transacting in any lending venue.Which of course would mean that every car sale by GM would end up on some dealer's showroom as channel stuffing moves to represent 100% of GM's monthly "sales."
As for GMAC's decision, it is more than clear that the second any lender is challenged on their MO, they will high tail it instead of risk suffering further liabilities.
"It also sends a signal to Massachusetts and other states that if you make it difficult for lenders to act they will take their business elsewhere," Mr. Cecala said of GMAC's decision.
And that in a nutshell is how US banks operate: break the law until for some crazy reason you can no longer break the law.
Then just high tail it out of Dodge post haste.