16 Banks Ordered to Compensate Victims of Improper Foreclosure

Turns out we sold your house by mistake.  Funny story…

You’re not going to believe this, but remember last year when we denied you for a loan modification, sold your house and kicked you out in the street?  Well, as it turns out… we screwed up… yep, it was all a big mistake… a misunderstanding, really.  Can you believe that?  It’s just the craziest thing.  Whoopsie!  Sorry about that.

How did it happen?

Well… funny story… you’re really going laugh… I swear.

Guess what… the federal government has ordered 16 of the largest mortgage servicers to reimburse homeowners who they foreclosed on IMPROPERLY.

Not only that but regulators, including the Federal Reserve, the Office of Thrift Supervision (“OTS”) and the Office of the Comptroller of the Currency (“OCC”) also told the servicers they have 45 days to hire auditors to figure out exactly how many homeowners they shouldn’t have made homeless in 2009 and 2010.

Well, isn’t that nice?  What a lovely surprise.

The joint report cited the usual suspects including Citibank, Bank of America, JPMorgan Chase and Wells Fargo, Ally Financial Inc., Aurora Bank, EverBank, HSBC, MetLife Bank, OneWest Bank, PNC, Sovereign Bank, SunTrust Banks, U.S. Bank, Lender Processing Services (“LPS”) and MERSCORP.

The servicers have all agreed, based on the auditor’s reports, to “remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies.”  No minimum or maximum amount was set by the agreement, so the sky’s the limit, I suppose?

The Federal Reserve’s stated that it believed financial penalties were “appropriate,” and I’d have to concur.  I mean, if a bank threw me out of my home without good reason… maybe caused my marriage to break up… made my kids change schools, leave their friends… possibly forced me into bankruptcy… you know, destroyed the rest of my adult life, I can’t think of anything but financial penalties that would possibly be appropriate.

I mean… flatware?  No, too personal.  A Cuisinart?  No, people might already have one.  Besides some of these folks are probably living in the park and without electricity… nope, the Fed’s right for once, it’s financial penalties for sure.

And don’t forget to buy a card to slip the penalties into… something tasteful… maybe get one of those that plays music when you open it… everyone likes those.

All three of the bank regulators promised to review the audits and the Fed also said that it plans to levy fines in the future as well.

And isn’t that a relief?  I’m sure glad this isn’t a one time thing.  I mean, I think there should be financial penalties every single time a bank throws someone out of their home that shouldn’t have been thrown out, don’t you?

I have to say that I like the Fed’s attitude on this issue.  I mean, the central bankers didn’t even pretend that banks might be able to stop throwing people out of their homes improperly, they just went ahead and said they’d continue with the financial penalties in the future when they do… not even “if” they do, but “when” they do.  Well, at least they’ve set expectations properly this time.

The government regulatory agencies stopped short of listing specific instances of bad foreclosures, but they did note in their report that:

“… deficiencies in foreclosure processing observed among these major servicers may have widespread consequences for the housing market and borrowers.”

Actually, I’m not entirely sure how to take that sentence… do they mean that in a good way or a bad way, do you suppose?  Like, do they mean “widespread” as in a lot of people will get checks, or that there’ll be lots of improper foreclosures?  Why do they have to be so cryptic… use the English and say what you mean, would you please?

It’s been four years since the housing meltdown started pulling our economy down the drain and I started screaming about it.  Since then, there have been more than five million homes lost to foreclosure, and roughly 2.4 million first mortgages were in foreclosure at the end of 2010, while another two million were at least 90 past due, so at serious risk of foreclosure.

And as of July 2011, foreclosures are up 12.8% over last year’s number, according to LPS, and there are some 6,452,000 mortgages going unpaid in the United States as of June 2011.

Not everyone was encouraged by the plan.  Congressional Democrats refer to the order as being too lenient on the servicer, and so House Democrats introduced a bill on Wednesday that if passed would require servicers to adhere to a series of specific steps, and include an appeals process, before even starting a foreclosure, but that sounds like the sort of thing that the banking lobby and the Republicans… (oh wait, that was redundant, wasn’t it?), I meant to say the sort of thing that the banking lobby will strongly oppose.

Rep. Elijah Cummings, D-MD, who is the top dog on the House Government and Oversight Committee said that he wanted to know what all of the abuses were that the government identified, who exactly committed them, and how this consent agreement will fix the behavior in the future.  He said:

“Based on what I have read … I am not encouraged at all.”

Well, no one said anything about fixing something in the future, did they Elijah?  No, they most definitely did not.  In fact, the Fed even made it clear that it would be happening in the future, so what more do you want than that in terms of transparency?  Some people are never happy.  I’m encouraged, aren’t you encouraged… I’m actually overcome with encouragement.

John Taylor, who is the Chief Executive of the consumer housing watchdog group, National Community Reinvestment Coalition, said the government’s action is a year too late.  Apparently, he’s okay with it taking three years to make amends when you throw someone out of their home improperly, but four years is too long.

He also points out that this order does little to help those who are now wrestling with a foreclosure and those who have already been thrown out improperly.  According to Taylor, instead of moving swiftly to foreclose and seize people’s homes, the banks should have been better at helping people modify their mortgage payments.

Oh my God… that is such a good idea… why didn’t we think of that?  I’ll have to remember to keep my eye on Taylor, he is one sharp cookie.  He also said…

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

Yeah, well you should have spoken up sooner then, shouldn’t you?

Look, this guy’s a bit of a whiner.  I mean… so, our government stood by and did nothing as potentially thousands of American citizens were thrown from their homes improperly, so what are you going to do… make a federal case out of it?

I mean, it’s not like the servicers beat the homeowners with sticks, right?  And they don’t seem to have raped any children.  No burning crosses on front lawns.  I’d say we got off easy here.  They might have done any of those things and more, heck, BofA stole someone’s dead husband’s ashes last year… and kept taking homes they didn’t even hold mortgages on… so, let’s just be thankful for the little things, okay.

So, my goodness… get over it… be happy… so, you got thrown out of your home of twenty years for no reason… your marriage broke up and you haven’t seen your kids in 18 months as a result… you lost your job when your employer saw your credit score fall to 420… and then you tried to kill yourself… you’re okay now… is it really that big a deal that you’re living in an apartment where the kitchen smells like ass?

See, that’s why everyone hates the Democrats, it’s all that whining.

Citigroup issued a statement saying it had “self-identified” needed changes in 2009.

Okay, good to know.  And don’t feel pressured to rush into changing anything… take your time on the whole implementation thing, we understand.

The bank also said that it has helped more than 1.1 million homeowners avoid foreclosure, but who knows… Hampsters always say stuff like that.  Citi also said:

“We are committed to working with our regulators to further strengthen our programs in these areas and meeting these new requirements.”

Now, that sounds a little brown-nosey for my tastes, but okay then.

And then our good friend Ally Financial, or GMAC if you’re in the you-don’t-want-to-know, said it had not found “any instance where a homeowner was foreclosed upon without being in significant default.” Thus proving conclusively that they have no sense at all of what the issue here is.

In fact, after writing this article, I’d say it’s an absolute lock that none of these people have the slightest idea what the issues are here.

N’est-ce pas?

Mandelman out.

And just because I know that some of you are probably thinking that I made some of this up just to be funny… HA!  I didn’t have to… it was that funny all by itself.  And that is both sad, and scary.  Here’s the link to the story in the Cristian Science Monitor, and what could be less funny than that?  Click it, you’ll see.

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