Obama Administration Strong Arms Mortgage Firm

There is something fishy going on in the home mortgage arena and the stench stretches all the way to The White House. Yet it has received only a couple of paragraphs worth of attention on the business pages of the mainstream media.

Home mortgage giant Ally Financial, Inc. issued a quiet note to its brokers and agents this week, telling them to halt evictions tied to foreclosures in 23 states. No public announcement was made about the action.

However, one of the brokers leaked the two-page memo to the media. The note, marked "Urgent," ordered brokers to immediately stop evictions, cash-for-key transactions and lockouts.

On the surface, this appears to be good news in light of soaring home foreclosures. Repossessions rose a staggering 25 percent in August, setting a new record. A total of 95,364 homes were taken over by banks in the 30-day period.

August marked the ninth month in a row that the number of homes lost to foreclosure has increased on an annual basis, despite failed, multi-billion dollar efforts by the Obama Administration to stem the tide.

Here's what the media missed on this story. Not many people have heard of Detroit-based Ally Financial, Inc. That's because it was once known as GMAC, Inc., an arm of General Motors, until the automotive company went belly up and filed for bankruptcy.

This same GMAC, now masquerading as Ally Financial, is 56.3 percent owned by the government. It received more than $17 billion in federal bailout funds, courtesy of the U.S. taxpayer.

Now it shouldn't be so hard for anyone paying attention to connect the dots. But let me spell it out. The federal government is the majority owner of Ally Financial. Record home foreclosures are not good news for the Obama Administration and the Democratic Party, locked in a struggle for control of Congress. How difficult is it to imagine that someone in the administration strong-armed Ally Financial into halting evictions of foreclosed homeowners?

What could be worse for Democrats than stories on the evening news showing homeowners thrown out of their homes? It is a nightmare scenario for an administration and a party that has championed its bumbling homeowner assistance program that has made only a small dent in the problem.

When it was caught red-handed, of course Ally Financial's spin masters tried to wave off the whole episode. A spokeswoman claimed the action was necessary to "allow time to address a potential issue that was raised in a number of existing foreclosures." She claimed the company had been working on the problem for three months. However, the mortgage firm declined to provide any details to shed light on the issue.

Corporate double-speak aside, the timing is not coincidental. The mid-term elections are less than two months away. If evictions are stalled at one of the nation's biggest home lenders, it serves Democrats, who already are on the hot seat for their failures to restore the economic health of the country.

If you are still not convinced, check out the list of 23 states affected by Ally Financial's action. They include many with down-to-the-wire races for the Senate, House and Governor.

For example, Florida, New York, Pennsylvania and Ohio are on the list. Others include: Connecticut, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Vermont and Wisconsin.

These are the kind of political shenanigans we have come to expect from the Obama Administration. Playing politics with home foreclosures smacks of the worst kind of meddling, even for an administration known for using bare-knuckled tactics, jiggered numbers and government muscle to bully corporate America.

There is a lesson here on why it is never a good idea for the federal government to own a private enterprise.