Slow Progress In Cleaning Mortgage Mess
There have been several lawsuits, enforcement actions and dollar settlements by means of which the state and the federal regulators have decided to make a sluggish approach towards the banks. This is an effort to help the borrowers of the mortgage.
However, there is still more work to be done in this context.
There are many homeowners who are in an effort to get monthly payments at lower rates. On receiving a letter from the Bank of America, Tate and his wife were excited. He letter confirmed about the modification of loan approval. This would have saved them $250 a month.
The couple was confused when they saw collection letters claiming that they were behind the payments. When asked, the bank refused and demanded a check of $3100 in order to stop the process of foreclosure.
The couple did everything asked by the bank. They filled the paperwork and other things. However, the cancellation letter kicked them out from the process of modification saying that they have preferred to leave or decline the services. Consequently, the modification process became unappealable.
A representative of the Bank of America claimed that Tate did not sign on the right place. There were delays, as well due to which the process of permanent modification was declined.
A complaint was filed with the Board of Consumer Financial Protection. Tate said that he got a call from the bank about an offer for the restart of the process. This was mainly because of the complaint and the media attention. The entire process takes only few months instead of the time they have taken.
Five years later, the Tates are not alone in this fight when the officials of the state and the federal have set off for home foreclosures. There are many people who are struggling to get loan modification.
Several federal agencies and 49 attorneys signed the National mortgage settlement with the Bank of America last year. The settlement was of the amount of $26 billion, but while signing they were not expecting this. They also signed with other big mortgage lenders like Citibank, Wells Fargo, Ally Bank and JPMorgan Chase.
The main purpose of the settlement was to cure the rogue practices of the lenders. The settlement included foreclosing on different borrowers who were not in default. Some of them also denied the modifications for the borrowers who succeeded in qualifying. They relied on the information of flawed account along with improper executed documents. There were also misapplication of the mortgage payments, shuffling of the borrowers from one representative to another, overcharging of fees and even foreclosing on a loan when the application for modification was underway. This in turn, subjected the homeowners to lots of delays and repeated requests for submitting the paperwork.
In any case, this settlement has helped the borrowers.
When it was signed in the year 2012, April there was five banks that had agreed to the settlement for reversing the damage in the name of fraudulent lending. This process made the housing market of US sink leading to global financial crisis.
Tom Miller, an Attorney General of Iowa is the lead negotiator of the states. He claimed that last month the bankers have given about $50 billion as a source of relief for the homeowners.
Of these five banks, it is only Ally Bank that has completed the commitments that it had specified in the settlement. It has the largest loan portfolio among all the five banks. Bank of America has given the largest relief.
However, the critics claim that the relief is the representation of the credit leading to short sales. In this process, a homeowner is denied to get a new loan sanctioned gets the permission to sell the house for the balance of mortgage. The relief also includes the second mortgage, which also does not necessarily stop the process of foreclosure.
According to Miller, almost about $11 billion of relief has gone for writing the mortgage loan balances. This is twice the level of the expectations of the state a year ago.
He also said that the main concern was to reduce, so that people are in their homes. The critics are saying a huge number.
In fact, an additional amount of $1.5 billion has been given for fund payments to the homeowners who suffered harm financially.
The progress rates has been slow to get the banks cut the mistakes that have harmed the homeowners by means of which they can negotiate with the terms of new loans and save the homes.
The congress, the regulators, the borrowers and their attorneys will get the first report card next week. It will contain information about how lenders are living up to the promises in the settlement.
In a report of February, Smith claimed that his office received more than 5500 complaints from the borrowers. Their loans were serviced by one of these five banks.
In an interview, he also said, Things are better but we aren’t there yet. There are still too many examples of situations that are not acceptable.”
In the last few weeks, the complaints have even become louder. Review was conducted on more than 300 complaints an attorney general of New York said he decided to take the Bank of America and Wells Fargo to court. They were not delivering the promises to end the multiple requests, processing delays and requests for documents.
The attorney said that they were ready to stop the conduct, but they have not stopped yet. This is the reason why the attorneys of the borrowers were taking them to the court.
A spokeswoman of Bank of America claimed that the complaints of the customers would be reviewed by the bank. She claimed that the bank would take the matter seriously and work to resolve the issue.
The bank Wells Fargo claimed that it will complete the compliance with the Mortgage Settlement and the associated standards. Consequently, they will work forward in continuing transparency for the progress of the relief of the consumers.
Many state attorneys general claims that they have been receiving calls from different frustrated borrowers.
An attorney general from Florida claimed that her office is getting more than 300 complaints and reviews are being conducted to know about the possible violations of the agreement. By sending a letter to the Bank of America, she wrote that review of the complaints is showing troubling patterns. This points the possibility of larger problems about the implementation of the settlements by the bank.
In the last month, an attorney general of Illinois claimed that a review of complaints found that 45% of the files said that the banks were asking for repetitive documents.
The new standards of service were expected to reduce the hassles of the homeowners. However, unfortunately people are experiencing more frustrating experiences. They are receiving multiple requests, runarounds and the same information resulting in delays. As a result, they are getting closer to the foreclosure of the homes.
The attorneys and the housing counselors are working with the homeowners and they also have reported about different practices claimed by the banks to correct.
In terms of provision of the settlement, there is lot more violation. This is claimed by a special project director Deborah Goldberg. This was testified before an oversight panel. In addition to that, there are many people who are still experiencing difficulty in working with the lenders and saving their homes.
There are also widespread violations carried out in the entire process of settlement.
here were cases when foreclosures have started when the borrowers were negotiating for modification of loan.
The banks also failed to meet the deadlines due to which they agreed while responding to an application for modification.
Thus, the federal regulators were requested to look into the matter and take some stronger actions of enforcement.
The banks have been greatly relieved of the uncertainty legally. On the other hand, there are homeowners that are continuously struggling to face risk of losing their homes.
In fact, it is found that the settlement that took place in the last year was not for the first time when regulators have sanctioned the companies of mortgage for ill treatment towards the borrowers. In 2011, the four federal bank regulators of the nation ordered the firms related to mortgage to fix the document systems and procedures. These regulators also said that the problems were intense and thus they want to present the risk for the safety of mortgage activities. This in turn, was expected to remedy the situation comprehensively and safely.
A comprehensive review was also called for through the enforcement action with more than 4 million loans from reports of endless delays, lost documents and notices of foreclosure.
However, it was in January, 2012 that the review was cancelled because it was thought to be taking too much time and costing huge money. A report in April claimed that the review did not collect enough data by means of which the harms of the homeowners could be determined. Irrespective of that, the regulators agrees to make the enforcement action when lender agrees to make the payments to the homeowners.
The National Mortgage Settlement along with curbing the mistreatment to the borrowers also aimed to prod lenders to pick up the loan modification process. In several cases, the solution was for cutting down of the rates of interest to reflect the deep cut rates. This was in an effort to save the banks from getting collapsed.
It was on the basis of that goal that the settlement fell short. After 1 year of the settlement, the lenders have modified many mortgages. More than 1.6 million modifications was completed in the previous year.
At the same time, the lenders have started the proceedings of foreclosure against other homeowners during the same period.
There were millions of homeowners that interested the pipeline of foreclosure in the last year, the Tates were successfully able to save their home. They dipped into the savings they had accumulated in their home. This is one of the most important things that prevented them from losing their home. They never missed a payment after that.
The payments had to be continuous in order to prevent them from the procedure of foreclosure. The Tates were lucky that they had the money to prevent the process.