California ordered Ally Financial Inc. to prove it was complying with foreclosure laws in the state or stop seizing properties, a reaction to the lender's suspension of evictions in 23 other states because of botched foreclosure paperwork it filed with courts.
The Detroit company, formerly known as GMAC, didn't suspend evictions in California because almost all foreclosures here by it and other lenders don't require a court order.
Still, Atty. Gen Jerry Brown on Friday told Ally to halt foreclosures in the state unless it can prove it is observing state laws.
Brown specifically cited a requirement that lenders, before initiating foreclosure proceedings, must try diligently to contact borrowers to determine eligibility for modifications of home loans written from 2003 through 2007.
California homeowners "are clearly in jeopardy since an Ally Financial official admitted his review of thousands of critical foreclosure documents was really a sham," Brown said.
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