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Some Big Mortgage Lenders Never Learn

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Mortgage Professional America | 07 May 2013, 12:48 PM Agree 0
Bank of America and Wells Fargo may be headed back to court in New York. According to a news item on CNBC, the New York Attorney General is preparing a lawsuit against these two heavyweight mortgage lenders for multiple violations of the historical National Mortgage Foreclosure Settlement Agreement of 2012.
  • William Matz | | 08 May 2013, 08:45 PM Agree 0
    Why should any of this come as a surprise? The bankswere required to follow the standards by MHA/HAMP in 2009. Later, many entered into consent decrees with the Federal Reserve again promising to follow the same standards. Some states enacted parallel requirements. Then the robo-signing scandal led to the AG investigation and settlement in which the five big banks promised to "really, really behave" this time. Now we see the same sorts of violations, At least the NY AG is pursuing this. And in California the new Homeowners Bill of Rights, effective in 2013 wrote much of the settlement into law, with the banks being required to pay borrower attorney fees for proven violations.

    How pathetic and unbelievable are bank protests that the errors are just the result of being overwhelmed. I remember the B of A CEOs announcing proudly in 2009 and 2010 that they were adding 10,000 and then 7,000 employees to deal with all the distressed mortgages. 2 bad they went and hired fast food workers and others with no experience, when there were tens of thousands of unemployed mortgage industry veterans who would have actually known how to handle the files. Do you think maybe hiring the incompetent was part of the plan? Numerous whistleblowers from big banks and servicers have come forward to explain how impeding resolution and forcing foreclosure was company policy.

    It seems likely that the true motivation for the rush to foreclosure has been lenders' and servicers' desire to "sweep the dirty laundry under the rug".They knew if challenged, they could not prove ownership and the right to foreclose. So they gambled [correctly] that most borrowers would not challenge them and they could rush through 90+% of the foreclosures unquestioned. In some of the judicial foreclosure states, such as NY, FL, and MA, attorneys began to challenge -successfully- banks claims of ownership and right to foreclose. But the vast majority of defaulting borrowers had neither the resources nor the inclination to challenge Wall Street, with its billions of dollars in taxpayer bailout funds. Not surprising then that less than 20% of borrowers predicted to be helped actually were.

    2 many war stories to tell here; one will typify. My client received her mortgage mod agreement from B of A in the mail and later the SAME DAY (!) got a call that the house had been sold at auction. However, she had the last laugh; after another year in her condo with no payments after foreclosure she learned that B of A got stuck with a $20,000 special assessment levied because of all the lost fees from defaulted units.

    What is especially sad is the shameful failure of America's financial institutions to accept responsibility for the debacle of securitization run amok. But when Wall Street idolizes the Gordon Gekko "greed is good" philosophy of business, can we really expect anything different?
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