U.S. Orders Big Banks to Reimburse Homeowners

foreclosureThe federal government on Wednesday ordered 16 of the nation's largest mortgage lenders and servicers to reimburse homeowners who were improperly foreclosed upon.

Government regulators also directed the financial firms to hire auditors to determine how many homeowners could have avoided foreclosure in 2009 and 2010.

Citibank, Bank of America, JPMorgan Chase and Wells Fargo, the nation's four largest banks, were among the financial firms cited in the joint report by the Federal Reserve, Office of Thrift Supervision and Office of the Comptroller of the Currency.

The Fed said it believed financial penalties were "appropriate" and that it planned to levy fines in the future. All three regulators said they would review the foreclosure audits. Under the agreements reached, the lenders and servicers have 45 days to hire an auditor and will "remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies." There is no minimum or maximum dollar amount identified.

In the four years since the housing bust, about 5 million homes have been foreclosed upon. About 2.4 million primary mortgages were in foreclosure at the end of last year. Another 2 million were 90 days or more past due, putting them at serious risk of foreclosure.

Critics, including Democratic lawmakers in Congress, say the order is too lenient on the lenders. House Democrats introduced legislation Wednesday that would require lenders to perform a series of steps, including an appeals process, before starting foreclosures.

"I want to know what abuses (the government agencies) identified, which banks committed them and how their proposed consent agreement is going to fix these problems," said Rep. Elijah Cummings, D-Md., the ranking member of the House Government and Oversight Committee. "Based on what I have read ... I am not encouraged at all."

Sen. Tim Johnson, D-S.D., chairman of the Senate Banking Committee, said the agreements struck were a "step towards addressing the improper and fraudulent practices to which many of the country's largest mortgage servicers have admitted."

The other lenders and service providers cited by the agencies include: Ally Financial Inc., Aurora Bank, EverBank, HSBC, MetLife Bank, OneWest Bank, PNC, Sovereign Bank, SunTrust Banks, U.S. Bank, Lender Processing Services and MERSCORP.

Citigroup said in a statement that it had "self-identified" needed changes in 2009 and that it has helped more than 1.1 million homeowners avoid foreclosure.

"We are committed to working with our regulators to further strengthen our programs in these areas and meeting these new requirements," the company said.

Ally Financial, formerly known as GMAC, said it had not found "any instance where a homeowner was foreclosed upon without being in significant default."

Without specifically identifying instances of bad foreclosures, the government agencies noted in its report that the "deficiencies in foreclosure processing observed among these major servicers may have widespread consequences for the housing market and borrowers."

John Taylor, chief executive of the National Community Reinvestment Coalition, a consumer housing watchdog, said the government's action is a year too late. It does little to help those who are just now wrestling with a foreclosure and those who have already been displaced, he said. Rather than moving swiftly to seize people's homes, the banks should have done a better job helping people lower their mortgage payments through modification programs, he said.

"This should have happened a long time ago," he said. "There are so many people who, if they had received a meaningful modification, could have stayed in their homes."

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jeffkelly77

The market rates may have gone down, or remained the same. For the homeowner to get qualified for lower rates, there are certain prerequisites but I would recommend you search online for "Mortgage Refinance 123" before you decide because they can find the 3% refinance rates.

April 15 2011 at 1:53 AM Report abuse rate up rate down Reply
inasctg56

reply to jkennedy: But it's the democrats that passed legislation that addresses the gop's 2002 legislation that allowed predatory lending and less oversite of wall street, banks, and mortgage companies. And Michelle Bachmann and the gop want to repeal this.

April 14 2011 at 3:18 PM Report abuse rate up rate down Reply
3 replies to inasctg56's comment
jkennedy806

Realty Trac 1Q 1/4 milion foreclosures were pulled or the bankster did not even file as the paper work is botched the real estate industry will not get back to normal till 2015 or later. Washington you should have let the banks fail.

April 14 2011 at 3:16 PM Report abuse +1 rate up rate down Reply
inasctg56

Watched a news report that showed banks and mortgage companies paying young people $10 an hour signing mortgage documents = someone else's name. Why? Because they lost the paperwork from the selling of mortgages over and over again. Yes the fed is going after them.

April 14 2011 at 2:58 PM Report abuse rate up rate down Reply
5 replies to inasctg56's comment
inasctg56

In February 2004, the Bush preempted national banks from state laws regulating mortgage credit, including state anti-predatory lending laws. State attorney generals began to notice a marked increase in predatory lending practices by mortgage lenders. Even though predatory lending was becoming a national problem, Bush looked the other way and did nothing to protect American homeowners. In fact, the govt chose to align itself with the banks that were victimizing consumers. Of the many errors of judgment and decisions of the Bush administration, this probably had the most damaging effect on our housing and economy.

April 14 2011 at 2:55 PM Report abuse rate up rate down Reply
4 replies to inasctg56's comment
ha6ai

What nonsense! These borrowers failed make their mortgage payments. They should have been foreclosed on. Some banks may have made some technical errors in the processing of the foreclosures, but when you don't pay your mortgage, you don't get free rent, and you don't get a free house. Your creditors have to sell it in order to be (at least partially) repaid the money they loaned you.

The Demo demagogues, including Obama, have no business trying to "redistribute" money to their "constituents".

April 14 2011 at 12:42 PM Report abuse -2 rate up rate down Reply
2 replies to ha6ai's comment
Wayne

ha6ai .... You need to do some research before putting your fingers on the Key board. You obviously don't have a clue.

April 14 2011 at 1:50 PM Report abuse +1 rate up rate down Reply
cyberfreddie

Hey ha6ai...What do you mean by calling forgery "technical errors"? Face it loser your nothing but a nitwit who can't think for himself. Quit posting your a train wreck.

April 14 2011 at 4:08 PM Report abuse rate up rate down Reply
RON

Yea Citi has helped many customers. They sold everyones mortgage to collection companies so they do not show Citi forclosing.

April 14 2011 at 12:02 PM Report abuse rate up rate down Reply
jkennedy806

Here 's what you do -- find you note? wheresthenote.org go to the deeds office in your government center is it the same one. If not, you are a victim of derivative trading. Make a copy of the note that is in the government center deed office. Call your Fed Congress person and Fed Senator, file an OCC complaint -- call you state senator and state house rep, call attorney general make sure when you file your complaints everyone knows the file numbers the OCC will give you one and the Attorney General will give you one. Let every know you mean business.

April 14 2011 at 10:49 AM Report abuse +3 rate up rate down Reply
3 replies to jkennedy806's comment
debbie

citibank did nothing to help us with our so-called modification.my husband lost his job and was out of work for nearly 1yr they reduced our payment by a whopping 48 dollars,and to top that of for some reason during the process(which took for ever)our principal balance was hiked up nearly 10 grand.during the process we recieved a notification that our escrow acct had an overage of over 400 dollars in the past when we had an overage we would recieve a check,but since they considered our loan late even though we were making the trial payment on time,we never saw that money.trying to get reach anyone with citibank is near impossible.I feel we were totally screwed with this so-called modification anyone out there have any suggestions,on someone we could contact beside citibank to relay this info to.Mktitans@aol.com thanks

April 14 2011 at 10:09 AM Report abuse rate up rate down Reply
1 reply to debbie's comment
jkennedy806

Debbie it depends what state you are in. If you are in PA call State Attorney General Ryan. Call NACA, call HUD, complain loud and fight - first file a complaint with the OCC, get ahold of the fed senators and fed congressional person, get ahold of a state rep and state senate as well, get ahold of your State Attorney General and start writing big time. Get a file box and start documenting in addition wheresthenote.org. Find it your note and then make the bank find your note thru RESPA.

April 14 2011 at 10:24 AM Report abuse +1 rate up rate down Reply
LSmith7713

Yes,
I did and You did not post a comment I spent twenty-five minutes drafting up,
but of course, You did

April 14 2011 at 7:06 AM Report abuse rate up rate down Reply