Tag Archives: Foreclosure settlement

Big banks abusing 2012 settlement deal: Weak oversight means banks can get away with foreclosing on homeowners in middle of negotiations


The nation’s largest mortgage lenders are violating the terms of a punitive 2012 settlement that was meant to prevent unfair and unnecessary foreclosures that destroyed communities and pushed working families from their homes.

Interviews by POLITICO with more than 20 housing counselors, Legal Aid lawyers and government prosecutors in states hard hit by the real estate crisis that followed the 2007 financial meltdown reveal that the nation’s top lenders are violating the settlement and rules put in place last year by the Consumer Financial Protection Bureau. In some cases, the problems — repeated requests for the same documents, for example — stem from ongoing disorganization deep inside the loan servicing departments of the banks, but some homeowners and their representatives claim the issues are a deliberate attempt to use foreclosure to resolve cases that have lingered for years.

In 2012, as 49 state attorneys general and the Holder Justice Department announced the landmark $25 billion accord with five of the nation’s biggest lenders, North Carolina Attorney General Roy Cooper spoke for many when he declared: “If homeowners get the runaround for a modification, if homes are foreclosed before other options expire, the monitor and the courts can step in and make it right.”

The AGs were especially inflamed by stories of banks that continued to accept payments from financially strapped borrowers even as they quietly filed paperwork to take back the homes.

But the abuses haven’t stopped. Since the beginning of 2014, more than 60,000 complaints have been filed nationwide by borrowers about servicers rushing the foreclosure process or mishandling a modification request, according to POLITICO’s review of the bureau’s database. But the complaints likely underestimate the problem because most homeowners have no idea the database exists, according to counselors and attorneys. More than 469,000 U.S. homeowners are in some stage of foreclosure as of July, with another 1.3 million in serious delinquency, according to the most recent data from CoreLogic.)

The settlement was almost three years old when Kimberly Cook, a single mom in her 30s, walked into the local deed office in Washington, D.C., worried that after a year of haggling, Bank of America had changed its mind about renegotiating her loan. She had made months of reduced payments on a trial basis, but bank representatives were now telling her that she had improperly signed documents — she had failed to use her middle initial, for example — and that she had not submitted an obscure document that isn’t even required by other lenders. A clerk confirmed her fears, telling her that the bank had filed papers a month before in preparation for foreclosure.

“She said ‘you’re not the first person who’s come down here,’” Cook said. “I just lost it. I was just scared.”

Bank of America denies that it misled Cook, insisting that her inability to submit the proper paperwork was the reason for delays and aborted attempts to permanently reduce her loan. But Cook’s ordeal, which required an attorney to sort out, has the hallmarks of the runaround that prosecutors had vowed to crack down on.

The abuses by lenders continue, POLITICO has found, because the settlement deal was crafted in a way that limited oversight and gave banks a wide enough margin of error that they wouldn’t be held accountable if they continued their bad practices. Lawmakers are waking up to the consequences of the cushy deal, as are current and former state prosecutors who say that civil investigations are underway.

“There have been multiple settlements requiring banks to change their servicing practices,” House Oversight Committee top Democrat Elijah Cummings of Maryland said in an emailed statement, “but it is clear that abusive practices continue.”


Bank of America forced to pay state in foreclosure settlement

And this is another example on why the big banks are too big to fail and need to be broken up.

Vermont will be paid $1.25 million by the Bank of Canada after the big bank failed to comply with state foreclosure laws.

“There were mediation attempts and agreements reached and for some reason, one way or another, one part of Bank of America didn’t know what other parts of Bank of America were doing,” Attorney General Bill Sorrell said of the bank’s activity following the federal case. “So people were being billed for higher amounts than what was provided in the settlement.

“These sorts of issues were specifically part of the complaints that the states had and the federal government had with Bank of America and others,” he continued. “We had this national settlement that they were to reform their procedures, and at the end of the day, they didn’t do what they were supposed to do.”

Read on.

Vermont AG Reaches $1.25 Million Settlement With Bank Of America Over Foreclosure Settlement Practices

CONTACT: Bill Sorrell, Attorney General, (802) 828-3171

July 10, 2015

Vermont Attorney General William H. Sorrell announced today that Bank of America will pay the State $1.25 million to resolve the State’s claim that the bank failed to honor the terms of settlement agreements it entered into with homeowners in foreclosure actions.

“Homeowners faced with foreclosure need to know that when their bank makes a deal to settle the foreclosure action, the deal will be honored,” said Attorney General Sorrell. “When banks fail to live up to promises they make to Vermont homeowners, there will be consequences.”

Under the settlement, $1 million will be paid to the State, and a $250,000 fund will be created to compensate Vermont homeowners who establish that Bank of America failed to honor the terms of their settlement agreement. Any homeowner who wishes to make a claim against the fund may submit a claim form, together with the required documentation, to the Vermont Attorney General’s Office, no later than September 8, 2015. For example, if after a mortgage foreclosure settlement with Bank of America, a Vermonter received statements from the bank with a payment amount, interest rate or total loan balance that was inconsistent with the settlement agreement, the Vermonter should apply for compensation from the fund. Claims must relate to actions of Bank of America that occurred after April 4, 2012, the date of the National Mortgage Settlement.

Source: Vermont Attorney General Office

Senator Brown discusses plans for Bank of America foreclosure settlement

LOGAN – Senior United States Senator for Ohio, Sherrod Brown (D) hosted a conference call on Wednesday to discuss a record setting $16 billion settlement from Bank of America.

“It’s been some six years since the financial crises wreaked terrible damage on homeowners and investors in our state and across the country,” said Brown. “We made progress, we know though that the economy can’t fully recover until the housing industry does.”

The Thriving Communities Institute, an organization dedicated to eliminating vacant housing, estimates that 50,000 abandoned properties across the state have fallen into disrepair. According to their website:

“Vacant properties act like infectious and deadly agents in our communities. One vacant house on a block destroys the value of nearby homes. Soon, due to loss of value, foreclosures and bank walk-aways, the nearby homes become vacant as the disease spreads. Soon the entire neighborhood is dead and diseased, having been destroyed by this contagious and toxic process. Then the adjacent areas are infected and the disease spreads further … predictably, relentlessly, and with devastating consequences.”

“In too many cases big banks disregarded the law, they foreclosed on homeowners who were trying to pay their bills on time, and through this practice the banks generated billions in profits,” said Brown. “It’s time for them to start paying some of that back to the communities who suffered.”

To this effect, Brown joined forces with many of his colleagues in congress to investigate and discover which institutions were the main culprits of the foreclosure fraud, resulting in the largest lenders agreed to pay more than $16 billion in retribution. The three larges U.S. banks must dedicate $13 billion of that total to various consumer relief programs.

“These funds won’t erase the housing crisis, but they’ll help reverse its course,” said Brown. “That’s why I’ve teamed up with Senator Rob Portman to ensure that Ohio receives its fair share.”

Read on.


400,000 Foreclosure Settlement Checks Sent To Wrong Address

400,000 Foreclosure Settlement Checks Sent To Wrong Address

Like millions of Americans who tried to stave off foreclosure in recent years, Lanette Worles says her bank repeatedly lost vital paperwork she submitted, scuttling her chance at saving her home.

Now, as Worles attempts to collect on a legal settlement intended as a remedy to just this type of practice, she confronts a depressingly familiar predicament: The check for her share of the settlement has gone missing, too.

“It’s been a total nightmare,” Worles, who lives in the Detroit suburb of Allen Park, Mich., said of her effort to track down the check. It was apparently mailed months ago to the wrong address, despite her attempts to correct the mistake in advance. “It seems like such a simple fix,” she said.

Worles is one of 4.2 million homeowners who qualify for a share of the $3.6 billion in cash payouts as part of the foreclosure abuse deal. And she’s one of 400,000 whose checks could not be delivered because they were sent to the wrong address, according to the Office of the Comptroller of the Currency.


Illnois, North Carolina AGs lay out complaints against banks not complying to the foreclosure settlement

Illnois, North Carolina AGs lay out complaints against banks not complying to the foreclosure settlement

North Carolina Attorney General Roy Cooper told reporters Tuesday that some banks “have fallen short” of complying with the deal but declined to name names.

Illinois Attorney General Lisa Madigan said Tuesday that her office found that in 60 percent of the loan modification files they surveyed, servicers failed to notify borrowers of missing documents in their applications within five days. In 45 percent of the files reviewed, banks made multiple requests for the same documents in violation of the servicing standards.

“The new servicing standards were supposed to eliminate headaches for homeowners,” Madigan said in a statement. “But unfortunately, it seems we’re hearing about the same frustrating experiences. Homeowners are. . . experiencing continued delays that put them closer to foreclosure.”


Exclusive: New York claims more proof of bank mortgage abuses

Exclusive: New York claims more proof of bank mortgage abuses

(Reuters) – New York Attorney General Eric Schneiderman said there is mounting evidence thatBank of America Corp, Wells Fargo and Co and otherbanks violated the terms of a settlement designed to end mortgage servicing abuses.

Schneiderman – who has said he plans to sue Bank of America and Wells Fargo for failing to live up to their obligations under the deal – said other states had found similar problems.

“Several other states have identified similar recurring deficiencies by the participating servicers,” Schneiderman said in a letter dated May 23 to the monitor for the settlement, former North Carolina Banking Commissioner Joseph Smith. The letter was obtained by Reuters on Friday.