Ally Pays Fannie - Robbing from Peter...

Recall that Ally is, for the most part, owned by Uncle Sam.  This is kinda like a little New Year's gift to himself.  While the payment is somewhat more than Ally had set aside, there is no way that our benevolent government ("OBG") would have financially harmed its investment.

(NYT) Ally Financial said Monday that it would pay $462 million to settle buyback claims on $292 billion in home loans it sold to Fannie Maebefore the industry tightened underwriting standards in the wake of the financial crisis.

GMAC Mortgage, which is part of Ally’s Residential Capital unit, originates and services loans then sells them to the government-sponsored mortgage companies Fannie Mae and Freddie Mac. As part of their repurchasing deals, Fannie and Freddie have the option to challenge Ally’s underwriting standards. If successful, they could have required Ally to buy back the loans in question.

The settlement covers loans that GMAC serviced for Fannie Mae before June 30 and all mortgage-backed securities that Fannie Mae bought from the company. The $462 million is slightly more than the reserves that Ally had set aside to cover a potential deal.

JPMorgan Finds Itself an Ally.

JPMorgan Chase reportedly is delaying foreclosure proceedings to systematically review documents after alerting attorneys that employees may have signed affidavits without personally reviewing the documents, the same issue that has plagued GMAC Mortgage (Ally).

"It has come to our attention that in some cases employees in our mortgage foreclosure operations may have signed affidavits about loan documents on the basis of file reviews done by other personnel – without the signer personally having reviewed those loan files," Kelly said.

Story here: Robo-signer

The implications of this are pretty big.  The bank cannot foreclose where affidavits are required and someone has not actually reviewed the file.  Think of the size of the foreclosure pipeline.  This will stall the process then clog the courts for some time.  Until this foreclosure process continues and the market is allowed to clear, housing cannot begin to recover.