Owners are losing homes while trying to modify mortgages
We have previously discussed the settlement agreement banks reached with federal regulators after an investigation revealed that many banks were foreclosing on homes that were not even in default, among other unscrupulous tactics. Borrowers in Georgia were to recieve $3.6 billion of that foreclosure settlement; in total, the largest banks in the U.S. agreed to pay $25 billion to settle the claims of the regulators.
In addition to the financial piece, the banks agreed to stop foreclosing on the homes of buyers who had filed applications seeking help. It has now been reported that the banks may have failed in the latter part of the deal. Regulators have reported that banks are suspected of stalling loan modification applications and foreclosing on the homes of those who are seeking help.
The process is called dual tracking, and it occurs when homeowners are working on loan modifications with banks, but at the same time the lender is moving to foreclose.
In New York, the state’s attorney general has said he plans to sue both Bank of America and Wells Fargo for failing to meet the terms of the settlement in this regard.
The Consumer Financial Protection Bureau is also cracking down on dual tracking and it has said that it plans to tighten related regulations – not only on the banks affected by the foreclosure settlement, but on all mortgage lenders and servicers.
In addition to the issue of dual tracking, it has been reported that many loan modification requests are wrongly denied. In other cases, modifications are completely inappropriate. One Georgia woman reported that she was relieved when she was granted a loan modification – and then she learned her monthly payment was only reduced by $1.01.
Homeowners who are at risk of foreclosure here in Georgia should consider seeking legal advice.
Source: Bloomberg.com, “Banks Warned Not to Flout $25 Billion Foreclosure Deal,” Clea Benson and Carter Dougherty, Sept. 11, 2013