Banks Are Failing (Refusing ?) To Comply With The Terms Of The Foreclosure Settlement

I was contacted by a homeowner having a mortgage "situation".  The homeowner, a single Mom, was having a hard time making mortgage payments and requested a short sale from her mortgage company.  The mortgage company requested a copy of the listing agreement after the home was placed on the market as a short sale for $124,987.00. The house originally sold for $156,700.00 in 2008.  I got an email, not a phone call, from the New Orleans Realtor Association directing me to remove the house from the market because the house was going onto the market as a HUD property.  The house went onto the market with HUD on May 24, 2013 for $95,000.00.  

Instead of dealing with a short sale and trying to cut the tax payer's loss (all of us) the mortgage company foreclosed and dumped the house into HUD's lap for their (mortgage company's) payout.

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 Upon election to Congress, I pledge to be an advocate voice for all those wronged by mortgage companies. 

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Four of the nation’s largest banks are still failing to play straight on mortgage modification applications, which violates the terms of a 2012 settlement over wrongful foreclosures, the independent monitor of the settlement reported Thursday. The results of the monitor’s tests to verify whether banks were complying with the settlement reinforce tens of thousands of consumer complaints and allegations of ongoing bank misdeeds from two state Attorneys General.

Of 29 separate compliance tests, CitiMortgage failed three, Bank of America and JP Morgan Chase each failed two, and Wells Fargo failed one. The report notes that JP Morgan tried to remedy one of its settlement violations, involving duplicate homeowner’s insurance, by refunding wrongfully charged premiums to more than 2,000 borrowers.

While the banks complied with between 26 and 28 of the monitor’s tests, the report summarizes about 60,000 individual borrower complaints over bank actions that violate the settlement in just a six month window. The report is based on complaints filed by elected officials on behalf of constituents, but the numbers may be much higher, as it doesn’t include complaints to the Consumer Financial Protection Bureau or any other misdeeds.

Those official complaints include 12,340 borrowers who said they were not given a single contact person to work on their case and 7,620 who said their designated bank contact was nonresponsive. In 4,587 official complaints, banks foreclosed on borrowers with pending loan modification applications, a process known as dual-tracking. There were also 3,050 instances of banks incorrectly applying payments or refusing to accept them.

This means that many of the abuses common in the foreclosure crisis, which the 2012 settlement sought to remedy, have continued. Dual-tracking, declined or misapplied payments, and shoddy staff work that complicates an already complex legal process for borrowers are common culprits in wrongful foreclosures. Deborah Castillo, one of the “Covington 7” homeowners arrested for a sit-in to protest the government’s failure to prosecute foreclosure fraud, is a victim of dual-tracking. So is Etienne Syldor, who was actually  making payments in excess of what the bank asked for during a trial loan modification. Jo-Ann Seipp had her house sold in foreclosure despite being current on her mortgage due to Wells Fargo’s paperwork and staffing errors. These are not isolated incidents, as Thursday’s report makes clear.

All this comes within the parameters of a settlement critics say was insufficient and poorly designed. As if to reinforce those arguments, Thursday’s report includes a depressing note: If the failures it identifies are not corrected, the settlement monitor can pursue fines of up to $5 million per bank, an amount unlikely to mean much to institutions that count their profit in the billions.

By Alan Pyke

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