GMAC Mortgage, one of the nation’s leading mortgage lenders, is back in business in Massachusetts after a monthslong hiatus prompted by a legal tussle over its foreclosure practices.
The company this week ended its prohibition against buying loans in Massachusetts from other lenders and brokers, said Gina Proia,cq a spokeswoman for GMAC’s parent company, Ally Financial Inc.
Proia declined to explain why GMAC reversed its position, which the company implemented in December after state Attorney General Martha Coakley filed suit in Suffolk Superior Court against GMAC and four other top lenders, alleging they improperly conducted home foreclosures.
‘‘GMAC Mortgage continually evaluates its business and makes changes as appropriate,’’ Proia said.
But the news, first reported by the Banker&Tradesman, was enthusiastically greeted by mortgage bankers, who said it is a sign of the lender’s confidence in the state as a place to do business.
Deborah Sousa,cq executive director of the Massachusetts Mortgage Bankers Association,cq said GMAC is one of the state’s largest investors. Its decision in December to stop buying loans in Massachusetts prompted concern in the industry that other lenders would do the same, she said.
Typically, GMAC buys mortgage loans from other entities, such as community banks, and then collects payments from those borrowers. It also loans money to individual homeowners in the state, but that accounts for a small percentage of its business.
‘‘It’s huge,’’ Sousa said of GMAC’s policy change. ‘‘Anytime you have a variety of investors, you have competition.’’
GMAC said it would stop buying mortgage loans here one day after Coakley sued it, Bank of America Corp., Wells Fargo & Co., Citigroup Inc., and JPMorgan Chase & Co. alleging they committed mortgage fraud and failed to reduce loan payments for struggling homeowners.
In February, Coakley joined other attorneys general in agreeing to a $25 billion, multistate settlement with the five major banks that allowed her to keep pursuing legal action on certain foreclosure issues. Coakley said Thursday she was pleased to hear GMAC has scrapped the ban on purchasing loans in Massachusetts.
‘‘Our pending lawsuit seeks to ensure that lenders follow the law before foreclosing on homeowners,’’ she said. ‘‘That position should be embraced by all responsible lenders, not cited as a reason to leave the state.’’Jenifer B. McKim can be reached at firstname.lastname@example.org.