Federal regulators are now going after eight more servicers for the same improper foreclosure practices that led Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial to settle with the attorneys general of 49 states last month. Suzanne G. Killian, a senior associate director of the Federal Reserve’s Division of Consumer and Community Affairs, recommended fines for HSBC’s United States bank division, SunTrust Bank, MetLife, U.S. Bancorp, PNC Financial Services, EverBank, OneWest and Goldman Sachs as a result of “unsafe and unsound practices in their loan servicing and foreclosure processing.” The practices to which she’s referring include (but are not limited to, I’m sure) sloppy, inaccurate or forged documents – acts now collectively known as “robo-signing.”
Some see this new recommendation as an attempt to push these firms to agree to the terms of the original, broader mortgage settlement. The majority of the original settlement funds are allotted to assist homeowners still in distress. Yet, a recent report indicates that bank reps still aren’t versed in the new programs. Mira Tanna, a housing advocate in Orlando, Fla., claims that two JPMorgan Chase employees who work directly with homeowners recently told her that they were not aware of the deal nor of their bank’s pledge to consider principal reduction for underwater borrowers. Thomas Kelly, a Chase spokesman, said in an email, “Chase continues to provide customer-facing employees with information and updates about the settlement and its impact.” … Riiight.
Although the banks involved in the deal were not made to admit wrongdoing as part of the settlement, they agreed to cease the practices they didn’t admit to committing. In addition, lenders’ standards would also make foreclosure a last resort after other options were explored; stop banks from foreclosing on a home while the owners were being considered for a loan modification; set protocol and a timeline for reviewing loan modification applications and give owners the right to appeal if they are denied; and create a single point of contact and adequate staff to handle questions. As more cases of alleged robo-signing crop up, some are reluctant to believe that anything has changed. This could be more concerning than the increasingly disappointing assistance programs created by the settlement.
Last November, federal banking regulators forced the nation’s largest servicers, including the eight cited by the Fed, to comb through foreclosure records and to rectify any problems. As part of that process, consumers who believe that they have experienced “financial injury” have until July 31 to request an independent review of their foreclosure and potentially receive compensation. So far, only 128,000 people have requested a review according to the Office of the Comptroller of the Currency. According to some housing advocates, this is largely due to borrowers being unaware of this option. One of You Walk Away’s most valuable services is the ability of our members to send in foreclosure documents for verification that they’re standard and an explanation of how they could affect the borrower or foreclosure process. As a result of this service being offered, You Walk Away’s Member Support Representatives have seen every foreclosure related document known to (the U.S.) man. We’ve seen maybe a handful of notices informing homeowners of their ability to request an independent review of their case. This means that even after the banks touted this program as a way to verify the validity of their procedures in the media, they failed to sufficiently inform those who it might actually affect – the homeowners. Hmm… Foreshadowing?