WASHINGTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley on Tuesday urged Congress to investigate Ally Financial Inc. and its subsidiary, GMAC Mortgage.

Coakley, who last week filed a lawsuit against five banks, including GMAC, told U.S. lawmakers that Ally and GMAC allegedly carried out illegal foreclosures, the Boston Globe reported.

The newspaper said the attorney general made the request in a letter sent five days after her filing against Bank of America, Wells Fargo, JP Morgan Chase, Citi and GMAC Thursday in Suffolk Superior Court. Coakley's lawsuit also names Mortgage Electronic Registration System Inc. and its parent, MERSCORP Inc., as defendants.

The letter was addressed to the chairs of the U.S. Senate Committee on Banking, Housing and Urban Affairs and the U.S. House Committee on Financial Services.

According to the Globe, Coakley wants Congress to look at GMAC because it is mostly owned by the U.S. Treasury following a bailout of the nation's financial system in 2008.

"The single most important thing we can do to return to a healthy economy is to address this foreclosure crisis," she said last week.

Coakley's lawsuit alleges the five banks committed mortgage fraud.

More specifically, the attorney general alleges the banks engaged in unfair and deceptive trade practices in violation of state law through the pervasive use of fraudulent documentation in the foreclosure process, including: so-called "robo-signing," foreclosing without holding the actual mortgage, corrupting the state's land recording system through the use of the private electronic registry system MERS, and failing to uphold loan modification promises to homeowners.

"Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law. Our action today seeks real accountability for the banks illegal behavior and real relief for homeowners," Coakley said Thursday.

The Massachusetts lawsuit seeks civil penalties, restitution for harm to borrowers and compensation for registration fees that were avoided. It also seeks to hold the banks accountable through permanent injunctive relief to provide a solution for prior unlawful foreclosures and requires that the banks, going forward, register assignments and other documents in accordance with state law.

From Legal Newsline: Reach Jessica Karmasek by email at

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