Ohio Attorney General Richard Cordray filed a lawsuit Wednesday against GMAC Mortgage alleging the the loan servicer and its agents filed fraudulent foreclosure affidavits to mislead courts in hundreds of Ohio cases. Cordray is the first attorney general to take civil action against the financing firm since allegations surfaced that Ally signed foreclosure documents without proper review. Court documents against Ally Financial often name GMAC Mortgage in the complaint, as that was the firm’s business name at time of mortgage origination. A spokesman for Ally now denies any intentional wrongdoing as part of its mortgage servicing operation. The Ohio AG still wants a day in court. “We know that as Ohioans we’re fighting to save our homes, [and] this loan servicer benefited financially from the dire circumstances,” said Cordray. “Instead of stepping up and assisting those at risk of losing their homes, it is clear that GMAC chose to compound the problem through fraudulent and unfair and deceptive practices.” Cordray asked the court to grant a preliminary and permanent injunction that would prevent Ally from foreclosing in any pending state cases and from selling any real estate owned properties in Ohio. Cordray also asked for civil penalties of up to $25,000 for each violation of Ohio’s Consumer Sales Practices Act and consumer restitution. James Olecki, spokesman for Ally Financial, responded to the allegations Wednesday afternoon, saying “There was nothing fraudulent or deceitful about GMAC Mortgage’s practices. If procedural mistakes were made in the completion of certain legal documents, GMAC Mortgage reacted proactively to the situation and immediately undertook to remedy the situation.” He also said GMAC made no inappropriate foreclosures and the firm plans to defend this lawsuit. Cordray also requested Wednesday that JPMorgan Chase (JPM) and Bank of America (BAC) suspend moving toward a judgment, sale, eviction or property transfer involving any foreclosure case with questionable affidavits. The two banks, also two of the largest servicers in the country, halted foreclosures last week due to concerns about robo-signing. Cordray went one step further and sent letters to Wells Fargo (WFC) and Citibank (C), two banks that have not issued a foreclosure recall, requesting that the banks meet with his office to discuss their foreclosure affidavit procedures. Write to Christine Ricciardi. Disclosure: The author holds no relevant investments.

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