Several states have taken action against Ally Bank, formerly known as GMAC, after the bank admitted to flaws in its business practices regarding foreclosures last week and voluntarily halted foreclosures in 23 "judicial foreclosure" states. 

The various inquiries and ultimatums issued by the states include:

• In Illinois, one of the 23 judicial foreclosure states where Ally/GMAC temporarily halted foreclosures last week, Attorney General Lisa Madigan sent a letter to Ally/GMAC demanding a meeting to address concerns that the company has engaged in "deceptive debt collection practices" in violation of the state’s Consumer Fraud Act.  “If I determine that Ally is rubber-stamping affidavits and filing them with our courts as evidence, I will take appropriate action," Madigan said in a statement.  "The law demands that lenders prove their case in foreclosure actions, and Illinois homeowners demand the same.”  Madigan also demanded data from Ally/GMAC detailing the impact of the bank's foreclosure activities on the state's homeowners.
• In Iowa, also a judicial foreclosure state, Attorney General Tom Miller opened an investigation into Ally/GMAC.  Miller formally requested Ally to provide information regarding the number of foreclosure case affidavits the company submitted to Iowa courts which were not based on personal knowledge, as required by Iowa law.  Miller has also requested that Ally provide information about steps Ally is implementing to ensure all affidavits comply with state law and court rules.
• In California, which is not among the 23 states which Ally/GMAC halted foreclosures, Attorney General Jerry Brown has issued a cease-and-desist order on Ally/GMAC, ordering the bank to stop all foreclosures in the state until it proves that it complies with state laws.  California law requires lenders to contact homeowners in default to determine eligibility for loan modifications on all loans made between 2003 and 2007.  In his depositions, Ally/GMAC's robo-signer said he cross-checked only the dollar amounts and the name on the mortgage with information in his computer system before he signed documents used in foreclosure.
• In North Carolina and Texas, investigations into Ally/GMAC were also underway by state authorities, according to news reports.

Moreover, there are indications that states were interested not only in Ally/GMAC but also other financial institutions who may have also used robo-signers.  Iowa's AG Miller said his investigation will seek to determine whether Ally’s alleged conduct is isolated, or whether other companies have engaged in similar alleged conduct.  Miller, as leader of the State Foreclosure Prevention Working Group, a coalition of attorneys general and other state officials in 11 states, said that he intends to work in close cooperation with other states in his investigation.

Miller's move to probe beyond Ally/GMAC may be a hint of problems to come for several other large banks which have been accused of using robo-signers by foreclosure defense attorneys and advocates.  Depositions of a document signer employed by JP Morgan Chase, for example, revealed foreclosure business practices similar to those of Ally/GMAC.