GMAC’s Foreclosure Problem

News today suggests that the problems with foreclosures at GMAC all come back to one employee.  GMAC says that Jeffrey Stephan is still working for the company.

Wait a week. He is so fired.

The news could be bigger than first imagined, because it may extend to foreclosed properties serviced by GMAC on behalf of the GSEs.

According to the Washington Post, one man (“the affadavit slave“) was charged with signing off on every foreclosure. He had a staff of thirteen, but this individual was responsible for verifying the legitimacy of the documents. He was expected to have the documents notarized, as well.

It seems like a mountain of work. Stephan was charged with signing 10,000 foreclosure documents per month. That is about five hundred foreclosures for every business day in the month! Put GMAC loan document reviewer next to Calcutta sewer cleaner and Saddam Hussein food tester as one of the World’s Worst Jobs.

The upshot is that the foreclosure crisis is about to enter into the News of the Weird, and it could become one more problem for the nation’s housing markets.  Imagine if thousands and thousands of REO properties are suddenly frozen in space. They can’t be sold, and in some instances, GMAC is going to have to unwind homes that have been sold.  There are already 15 months of homes on the market, and millions more in the shadow inventory.