Banks Near $10B Settlement Over Foreclosure Abuses

Daily Real Estate News | Wednesday, January 02, 2013

  

Fourteen banks are reportedly nearing a $10 billion settlement with banking regulators over the banks’ past involvement in foreclosure mishandlings that included faulty paperwork and excessive fees, The New York Times reports.

About $3.75 billion of the reported settlement would go to aid home owners who lost their homes to foreclosure — more than double what was set aside from a $26 billion settlement reached in 2012 among the state attorneys general and five of the nation’s largest banks.

The majority of the money from the latest settlement would go to help home owners struggling to make their payments and remain in their homes, such as with aid like loan modifications or lowering the amount of principal on their mortgages.

Banks have faced several settlements with government officials and home owners in recent months that have aimed to hold them accountable for the 2008 financial crisis and subsequent housing slump. From 2007 to early 2012, four million Americans faced foreclosure.

“It’s certainly a victory for consumers and could help entire neighborhoods,” Lynn Drysdale, a former co-chairwoman of the National Association of Consumer Advocates, told The New York Times about the latest proposed settlement. “But the devil, as they say, is in the details, and for those people who have had to totally uproot their lives because of eviction it may still not be enough.”

The same banks involved in the $26 billion mortgage settlement--JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Financial — also are included in this recent settlement, The New York Times reports.

Source: “Settlement Expected on Past Abuses in Home Loans,” The New York Times (Dec. 30, 2012)

Judge OK's $26B Foreclosure Settlement

Daily Real Estate News | Monday, April 09, 2012 

 

A federal judge granted final approval to a landmark $26 billion settlement over foreclosure processing errors, clearing the way for the nation’s five largest lenders to begin unraveling aid to home owners. The settlement includes guidelines for banks in compensating home owners who may have been wrongfully foreclosed upon as well as mortgage modifications — including principal write-downs — of up to 1 million home owners.

The settlement was first announced more than a month ago but awaited a judge’s final approval. The settlement is between the nation’s five largest mortgage lenders and the attorneys general of 49 states and the District of Columbia. The five lenders part of the settlement are Bank of America, Citibank, JPMorgan Chase, Wells Fargo, and Ally Financial.

Here's a breakdown of how the settlement money will be allocated:

• At least $17 billion will go toward modifying mortgages of delinquent borrowers. The modifications may include principal reductions to mortgages of up to $100,000 or more for 1 million home owners who are underwater or delinquent on their loans. 
• About $3.7 billion will go toward refinancing mortgages for home owners who are current on their payments. This aid is estimated to help about 750,000 home owners. 
• $5 billion will go toward banks’ paying fines to the states and federal government for the foreclosure errors. A portion of that will go to funding compensation to home owners who lost their homes to foreclosure due to errors. They stand to receive payments of $1,500 to $2,000. 

The banks have also agreed to adopt stricter standards in processing foreclosures to avoid future errors.
As long as the banks abide by the terms of the settlement, they will have immunity from future claims by the state governments for wrongdoings in the processing of foreclosures.

Oklahoma is the only state that did not participate in the settlement agreement. In early February, the state reached a separate agreement with the nation’s five largest lenders for an $18.6 million settlement.

Watch this video to get more info on the mortgage settlement.

Source: “Court Approves $26 Billion Foreclosure Settlement,” CNNMoney (April 6, 2012)

Banks Behaving Badly

Today there were two news stories about banks harassing their customers.

First up is GMAC Mortgage. In 2006 they were sanctioned for foreclosing on homes without the proper documentation. Seems the "sworn affidavits" signed by a mortgage executive which were used to justify the foreclosure were not actually read by said executive, nor were these documents signed in front of a notary.

Guess they didn't learn the error of their ways, since the GMAC Mortgage is facing new allegations that they evicted homeowners without checking to see if they were actually in default. Since this new allegation came out, GMAC Mortgage has suspended foreclosures in 23 states.

The second sunmission in today's Bad Bank contest is Bank of America. The bank has fired a debt collection service after an expose' by ABC News revealed the agency used racist slurs when contacting Bank of America customers.

What kind of slurs? Here are some excerpts from calls made to Allen Jones. Mr. Jones owed $81 on his Bank of America credit card:

"What's up, you f---ing n---r?"
"This is your f---ing wake up call, man."
"You little, lazy ass bitch, get your mother f---ing ass up and go pick some mother f---ing cotton fields, bitch."

You can see the full story on tonight's ABC World News with Diane Sawyer and Nightline.