SEC Discloses Mortgage Fraud Investigation of Ally Financial Unit

The Securities and Exchange Commission is investigating Residential Capital, the mortgage unit of bankrupt Ally Financial, for possible mortgage fraud. From bankruptcy attorneys Stacia Wells and Robert Seigel (law firm Bilzin Sumberg)

“The SEC disclosed in court documents on Monday that it formerly commenced an investigation in February of this year to probe possible fraud in the offer and sale of mortgage-backed securities by ResCap. The agency was forced to reveal the existence of the investigation in order to compel R.R. Donnelley & Sons to turn over due diligence reports that its wholly-owned subsidiary, Office Tiger Global Real Estate Services, prepared for the investment banks that underwrote the troubled securities.

The SEC claims it needs the reports to determine whether ResCap violated federal securities laws by making ‘material misrepresentations or omissions about the mortgage loan pools that backed the securitizations under investigation.’”

Read the full update: SEC Investigating ResCap for Possible Mortgage Fraud - Bilzin Sumberg»