Foreclosures at Ally Financial Inc.’s GMAC Mortgage unit is being investigated by Attorneys General in three U. S. states, following the lender signaling that it would stop a few evictions after it found that the documentations were faulty.

Investigations have been initiated at Texas, Iowa and Illinois into the mortgage practices carried out at Ally, whilst California that has been affected by GMAC’s action, placed an order upon the firm to halt foreclosures unless it proves conformity to the law under state legislation.

GMAC Financial Services, the car financing company, is reportedly pursuing talks with the Treasury Department with a view to receive another capital injection of $2.8 billion to $5.6 billion.

Treasury Department has confirmed that it is pursuing discussions with the GMAC about providing capital aid for the third time.

The government has already provided $12.5 billion to the GMAC and possesses 35 per cent stake in the lender.

GMAC provides wholesale financing to numerous GM and Chrysler dealerships to pay for vehicles on their lots.