Yesterday Moody's Investors Service placed the ratings of 319 RMBS tranches of 114 deals serviced by GMAC on review for possible downgrade as a result of specific servicing concerns.

This rating action impacts $7.6 billion RMBS. In addition, 462 tranches of 80 other GMAC-serviced deals that Moody's placed on review for possible downgrade on March 4 are still under review for possible downgrade.

According to Moody's, the rating action was driven by the irregularities in GMAC Mortgage (GMACM) foreclosure process that have surfaced recently.

This month, the servicing firm told real estate brokers to suspend evictions and REO property sales in 23 states. The suspension is aimed at giving GMACM time "to address a potential issue that was raised in a number of existing foreclosures challenging the internal procedure" the  company utilized for filing affidavits as required by courts in certain  states.

Considering that state attorneys general in non-judicial states are  also exploring GMACM's processes, the rating agency believes that the scope of the investigation might not just be limited to the 23 judicial states. Because of this, the affected loans from all states were included in the analysis.

GMACM has said that one or more of its employees had signed affidavits without firsthand knowledge as to the accuracy of facts stated in the document. Some states laws require that the person preparing the affidavit have personal knowledge of the facts in the affidavit.

In related news, ASR sister publication National Mortgage News reported that Connecticut Attorney General Richard Blumenthal has asked Ally Financial to freeze all home foreclosures within its borders, saying his office is investigating "defective" documents filed by the company and its mortgage division, GMAC.

Connecticut is the latest in a growing number of states that has either launched an investigation of Ally's foreclosure practices or soon will.

"I am demanding a freeze on all GMAC/Ally foreclosure actions to forestall horrendous, illegal harm against homeowners," Blumenthal said in a statement late Monday. "The GMAC/Ally foreclosure steamroller should be stopped so the company can be held accountable. My office has already confirmed that some defective documents were filed in Connecticut."

Among the AG's demands is a request for the company to identify employees or contractors who reviewed and signed Connecticut foreclosure-related documents and describe their relationship to the bank.

Ally's mortgage unit, Residential Capital Corp., which also uses the trade name GMACM, is facing court challenges on some of its foreclosures.

In a sworn deposition Ally employee Jeffrey Stephan admitted that he signed off on 10,000 foreclosure documents a month without reviewing them.

ResCap/GMAC ranks fourth nationwide among residential servicers with roughly $370 million in receivables.

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