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Updated to include additional information from spokeswoman



) --

Ally Financial's

mortgage servicing subsidiary,

GMAC Mortgage

, has not issued a moratorium on residential foreclosures, a spokeswoman told


on Tuesday.

The spokeswoman was responding to claims that GMAC Mortgage had halted foreclosures in 23 states, reported by


on Monday, which cited a Sept. 17 internal letter.

"We in fact have not issued a moratorium on all residential foreclosures," says Ally spokeswoman Gina Proia. "New foreclosures are continuing without interruption in our usual practice."

Rather, GMAC Mortgage has temporarily suspended evictions and real-estate owned (REO) closings related to certain foreclosures that have been challenged in court. The spokeswoman declined to comment on the specific merits of the challenges due to litigation, but did say that new processes have been developed in relation to the alleged questionable activity.

"While existing foreclosures may experience delays," she says, "we expect delays to be resolved in the next few weeks without serious consequence."

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The company hopes to "see the vast majority of the challenges to be remediated in the next few weeks and we expect to do that without serious consequence," she added. "We are diligently working to resolve the situation."

Ally posted a statement posted on its website on Monday addressing the media reports.

"Recent reports have stated that GMAC Mortgage instituted a moratorium on all residential foreclosures in 23 states," the statement said. "This is not true. In fact, all new residential foreclosures are continuing in the ordinary course of business with no interruption in our usual practice."

The company said the so-called speculation is stemming from orders by GMAC Mortgage to certain third-party REO brokers to allow extra time to "address a potential issue that was raised in a number of existing foreclosures challenging the internal procedure we used for executing one or more judicially required forms."

GMAC Mortgage had reportedly told brokers to suspend evictions and real-estate owned (REO) closings on those properties "where the related foreclosure could have been impacted by the same internal procedure."

It is also reviewing certain foreclosures that were previously executed "where the same procedure may have been used," the statement said.

GMAC Mortgage has been addressing the procedural challenge for more than three months. In all other respects, the mortgage business is operating as usual, it said in the statement.

Media reports say the issue stems from legal investigations at several large servicers on the issue of potential fraudulent foreclosure. Apparently some firms have foreclosed on homeowners without verifying they own the loans, according to



Foreclosures rose at an elevated rate for the second month in a row

, according to RealtyTrac, with one in every 381 U.S. homes receiving a foreclosure filing.

Big banks such as

Bank of America

(BAC) - Get Bank of America Corp Report


Wells Fargo

(WFC) - Get Wells Fargo & Company Report


JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report

, realize that the mortgage malaise won't stop spreading throughout their loan books until barrier walls are erected. They've started

providing better workout solutions

than those offered by the federal government, because banks have more flexibility to tailor modifications to individual borrowers' needs. The question now is whether progress has come too late.


reported on Monday that

GMAC Mortgage was halting foreclosures in 23 states

, citing an internal memo.

GMAC Financial Services was renamed Ally Financial in May. The renamed company is majority owned by the U.S. government, along with Cerberus and

General Motors

(GM) - Get General Motors Company Report

as owning large stakes in the troubled lender. GMAC-now-Ally held the largest amounts of financing for GM customers, however

GM agreed in July to acquire AmeriCredit (ACF)


--Written by Laurie Kulikowski in New York.

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Laurie Kulikowski


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