Foreclosure Abuse Settlement a Farce From the Start
As New York Attorney General Eric Schneiderman attempts to take Wells Fargo to task for its consistent failure to abide by the terms of the massive foreclosure abuse settlement last years, there are finally glimmers of realization that the agreement was never about justice.
It was touted as “groundbreaking” and “a huge victory for consumers.”
However, our Miami foreclosure defense attorneys know that despite the $25 billion price tag that seemed to impress so many at the time, it was always a drop in the bucket for the banks. What’s more, only about $5 billion of that was coming directly from bank coffers (divided among the five largest financial institutions in the mortgage lending game).
The other $20 billion came in the form of “credits” these firms received for extending modifications for underwater loans. What few stopped to consider was that in the long-run, it’s in the banks’ best interest to modify a loan and reduce the incidence of foreclosure. So banks were getting government credit for doing something that was already was for their own good anyway.
That’s not to say nothing good came of it whatsoever. Homeowners who suffered abuse in the midst of the foreclosure process were compensated – to a degree. On average, the 750,000 people who filed claims received $2,000 a piece.
These were individuals who were victimized with relentless bank harassment for non-payment. They suffered eviction and marred credit scores, even though the lawsuits that ultimately led to those actions were shams. The documentation banks used to force these folks from their homes were often forgeries.
As financial commentator Susan Webber noted, the price for forgeries and document fabrications has been set: $2,000 each.
The greater part of that national mortgage settlement, though, was supposed to be the shoring up of consumer protections. They were supposed to be granted a single point of contact. Banks were required to maintain adequate staffing levels and properly train the staff it maintained. There was supposed to be improved communication with borrowers and banks promised to end dual track foreclosures and the imposition of improper fees.
(Go figure that good customer service would be a novel concept.)
In exchange for their cooperation, the government agreed to reduce more than $1 billion in penalties down to zero.
And yet, even being bound under the terms of the settlement agreement, Wells Fargo apparently hasn’t upheld its end of the deal. (Neither has Bank of America, though its renewed promises of better behavior have staved off further legal action, for now.)
Schneiderman’s office contends that mortgage relief applicants have been burdened with redundant document demands, missed deadlines by the banks and a host of other abuses that run contrary to both the letter and spirit of the settlement agreement.
What’s more, these and other lenders have exploited loopholes in the agreement. Specifically, several have sold mortgage servicing rights to large bundles of loans to third-party agencies – which are not bound by the terms of the national settlement agreement, in effect allowing banks to sidestep their promises and obligations to consumers.
Over and over again in this saga, it is the homeowner who suffers.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.