Mortgage Lenders Under Fire After Reparation Checks Bounce
In the midst of the housing market meltdown, there were unquestionably families who were struggling to stay in their homes, with some having bounced a check or two.
The banks didn’t care.
Now, as our Miami foreclosure lawyers have learned, the shoe is on the other foot.
The fact that the responsibility for the mortgage crisis falls squarely at the doorstep of these banks and their unscrupulous lending practices, has led to a number of billion-dollar settlements. The aim was to not only aid those who are continuing to struggle as a result of this fall-out, but also to offer compensation to those who were wrongfully and traumatically forced out of their homes.
Reportedly though, a number of those checks submitted to former borrowers have bounced.
These payments had resulted from a $3.3 billion deal reached after the failed foreclosure review process was abruptly halted by federal regulators as both ineffective and skewed in favor of the banks.
Payouts to some 4.4 million homeowners who had been foreclosed upon in 2009 and 2010 are slated. Wronged borrowers will receive checks of anywhere from a few hundred dollars all the way up to $125,000 – with the majority averaging about $1,000.
But almost as soon as those checks were issued, reports were filed claiming that a number of the checks had bounced. Clearly, these financial institutions have the funds to cover these checks. Presumably, bank presidents’ paychecks aren’t bouncing.
It appears that a consulting company that was hired to distribute the funds collected the money from the banks, but then failed to actually put it in the account from which the victims’ checks were being drawn.
The banks haven’t yet responded as to whether they will tack on interest to those customers who were given rubber checks – as they would no doubt demand were the situation to be reversed. We doubt it.
In addition to this debacle, a California consumer group, California Reinvestment Coalition, is alleging that a number of these banks are continuing the practice of proceeding with foreclosures against borrowers, while at the same time supposedly working to help modify the principal balance on those loans. This practice, called dual-tracking, is squarely against the agreement reached in a $26 billion national foreclosure abuse settlement deal last year. That same group alleges that providers of mortgage customers service also continue to violate certain state consumer protection laws.
What’s especially troubling about this aspect is that banks were given $8.5 billion in credit toward their settlement debt in order to work with consumers to hammer out mortgage modifications and help people avoid foreclosures.
As we’ve previously reported, most banks are instead opting for short sale options, which technically aren’t foreclosures, but they don’t keep people in their homes either.
Of course, we can’t say we’re surprised that the banks have once again failed to hold up their end of the bargain. But it’s high time federal regulators grew a backbone and started to do something meaningful about it.
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.