It appears that the United States’ largest mortgage lenders are violating the terms of a 2012 settlement that it made with federal and state governments. The punitive, or punishment, settlement was meant to prevent unfair, deceptive and unnecessary foreclosures by lenders. Many say these troubling practices continue despite the settlement and as a result, tens of thousands of homeowners are suffering.
Following the 2007 financial meltdown, the real estate market was soon in crisis. Record numbers of homeowners sought assistance from their lenders in order to stem off foreclosures. In response, many of the lenders took advantage of the situation in a number of ways.
One particular abuse that angered just about everyone included the practice of “double tracking.” Essentially, banks continued to accept monthly payments from homeowners while quietly filing paperwork to foreclosure their homes. The practice is still going on, and more and more cases are heading to court.
Greater than 60,000 complaints have been filed across the country since the beginning of 2014. According to the most recent data from CoreLogic, there are greater than 469,000 United States homeowners that are in some stage of foreclosure proceedings and there are another 1.3 million people who are delinquent on their loans.
Many people are attempting to modify their mortgage and are frequently met with responses from the bank that claim homeowners’ signatures are not cursive enough or are missing their middle initial. Other lenders say that some of the borrowers’ paperwork is missing despite numerous attempts to send and resend the documents.
Many lawmakers realize that minimal oversight over lenders’ practices is the cause for the current crisis, as government agents only audit a tiny percentage of the total servicing practices.
Yet the number of borrowers seeking help continues to overwhelm banks. And the banks are pushing back hard. When questioned about practices like requesting “more cursive” signatures, etc., a Bank of America spokesperson responded that, “Other than meeting program and investor guidelines for file accuracy and completeness, there is absolutely no logical reason that the bank, as servicer and representative of the investor, would do anything to delay the conversion of an approved and fulfilled trial modification to permanent status.”