Hat tip to kwaping for sending this along, from the AP:
WASHINGTON – The federal government on Wednesday ordered 16 of the nation’s largest mortgage lenders and servicers to reimburse homeowners who were improperly foreclosed upon.
Government regulators also directed the financial firms to hire auditors to determine how many homeowners could have avoided foreclosure in 2009 and 2010.
Citibank, Bank of America, JPMorgan Chase and Wells Fargo, the nation’s four largest banks, were among the financial firms cited in the joint report by the Federal Reserve, Office of Thrift Supervision and Office of the Comptroller of the Currency.
The Fed said it believed financial penalties were “appropriate” and that it planned to levy fines in the future. All three regulators said they would review the foreclosure audits. Under the agreements reached, the lenders and servicers have 45 days to hire an auditor and will “remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies.” There is no minimum or maximum dollar amount identified.
In the four years since the housing bust, about 5 million homes have been foreclosed upon. About 2.4 million primary mortgages were in foreclosure at the end of last year. Another 2 million were 90 days or more past due, putting them at serious risk of foreclosure.
Critics, including Democratic lawmakers in Congress, say the order is too lenient on the lenders. House Democrats introduced legislation Wednesday that would require lenders to perform a series of steps, including an appeals process, before starting foreclosures.
“I want to know what abuses (the government agencies) identified, which banks committed them and how their proposed consent agreement is going to fix these problems,” said Rep. Elijah Cummings, D-Md., the ranking member of the House Government and Oversight Committee. “Based on what I have read … I am not encouraged at all.”
Sen. Tim Johnson, D-S.D., chairman of the Senate Banking Committee, said the agreements struck were a “step towards addressing the improper and fraudulent practices to which many of the country’s largest mortgage servicers have admitted.”
The other lenders and service providers cited by the agencies include: Ally Financial Inc., Aurora Bank, EverBank, HSBC, MetLife Bank, OneWest Bank, PNC, Sovereign Bank, SunTrust Banks, U.S. Bank, Lender Processing Services and MERSCORP.
Citigroup said in a statement that it had “self-identified” needed changes in 2009 and that it has helped more than 1.1 million homeowners avoid foreclosure.
“We are committed to working with our regulators to further strengthen our programs in these areas and meeting these new requirements,” the company said.
Ally Financial, formerly known as GMAC, said it had not found “any instance where a homeowner was foreclosed upon without being in significant default.”
Without specifically identifying instances of bad foreclosures, the government agencies noted in its report that the “deficiencies in foreclosure processing observed among these major servicers may have widespread consequences for the housing market and borrowers.”
John Taylor, chief executive of the National Community Reinvestment Coalition, a consumer housing watchdog, said the government’s action is a year too late. It does little to help those who are just now wrestling with a foreclosure and those who have already been displaced, he said. Rather than moving swiftly to seize people’s homes, the banks should have done a better job helping people lower their mortgage payments through modification programs, he said.
“This should have happened a long time ago,” he said. “There are so many people who, if they had received a meaningful modification, could have stayed in their homes.”
This is just another “cost” of doing business that will be passed on to those of us who are paying our bills on time.
Then again, on my last credit card bill I got a notice that said if I was late on my bill my rate would jump to 18.00%.
Least it’s 18 & not 30.
I seriously wonder how many people with mods (given the amount of re-defaults) would stay…not to mention how much truly needs to be deducted on average to be able to make it “worthwhile” to stay, underwater or not.
Responsibility and discipline are for wusses. Real men feed at the trough of Free Government Cheese.
I do not think there will be much cheese. Almost all foreclosures in judicial foreclosure states were at least 360 days past due. Hard to argue these people could have been saved without robo signing.
Not going to add a lot to this, but I will say this, the lower end was treated much differently than the higher end by the banks.
Maybe it was because they lived in the higher end area’s ( just saying.).
I don’t have a problem with penalizing banks for not following proper foreclosure procedures. But what we should be doing is going back and levying penalties on those who didn’t follow proper qualification procedures when all these failed loans were issued in the first place.
I’m sorry, but your headline “Deadbeat cheese” and the lede of the article ar not the same story. This story is about people who had their homes taken improperly, i.e., not deadbeats.
Jiji
in the lower end there were a lot more people who put no money down and there were a lot of speculators. Could that be why they were foreclosed on quicker?
I agree with Former RB. I thought shadash wrote the headline.
Except the only issue is that a lawyer did not sign each piece of paper. Almost every person who had the house they lived in taken away had not made a payment in over one year. That is not illegally having a home taken away, that is scamming a system and ripping off the American taxpayer who own the mortgage through FNM, FRE, and the FHA.
http://www.miamiherald.com/2011/03/25/2134407/marshall-c-watsons-law-firm-to.html
For most of us, “sub-par” performance (lying in court) would mean baloney sandwiches for lunch and non-consensual relations with our cellmates at night.
Take home lesson for KIF: if you get caught without a high-priced lawyer, you’re a scammer, with one, you’ve just done “shoddy” work.
Sorry, I meant KII, not KIF.
Renter who do not pay their home payment for two years live on the streets. Having a lawyer review standard documents is bureaucratic red tape that slows up the process. Oh yeah and employs sub standard attorneys.
Wake me when they foreclose on someone who hasn’t missed a friggen year of payments. Disgusting how all personal financial responsibility in this county has been lifted from homeowners. Duh…don’t sign up for a $5k/mo payment when you make $4k/mo genius. Disgusting. Foreclose on ’em and give those properties to people who are financially responsible at the low prices they deserve for being financially responsible.