Feds Crack Down on Wrongful Foreclosures by Banks and Mortgage Firms
Federal regulators recently ordered banks and mortgage servicers to identify borrowers who lost their homes in a wrongful foreclosure and provide appropriate compensation.
June 10, 2011
During the financial turmoil of the past several years, no issue has troubled American families more than the possibility of losing their homes. Many have turned to debt relief attorneys for advice about how to stop foreclosure by pursuing a loan modification, short sale or other strategy.One important related issue -- wrongful foreclosures -- received little attention until late last year. Suddenly, cases from around the country began to reveal that employees of lenders and loan servicers were signing legal documents that attested to personal knowledge of a mortgage file despite the fact that they had never reviewed the details of the paperwork. In addition to this so-called "robo-signing," some servicers who had initiated foreclosure proceedings on mortgages purchased from the original lender were unable to provide documents that even proved a borrower's responsibility for the debt.
In April, federal regulators from the Federal Reserve, Office of the Comptroller of the Currency, and Office of Thrift Supervision ordered banks and mortgage servicers to identify borrowers who lost their homes in a wrongful foreclosure and provide appropriate compensation. The action is part of an agreement between the federal government and major banks such as Bank of America, Citibank, HSBC, JPMorgan Chase, U.S. Bank, Wells Fargo, SunTrust Bank, US Bancorp and Ally Financial, as well as many large loan service providers.
Some commentators lament the lack of any mention of penalties for financial firms that proceeded with such a drastic remedy despite the lack of proper documentation. One foreclosure attorney characterized the measure as declaring banks to be "too big to punish." However, mortgage industry observers are closely watching a separate inquiry into mortgage servicing abuses involving the attorneys general of all 50 states, as well as the U.S. Justice Department, the Federal Trade Commission, the Department of Housing and Urban Development, and U.S. Treasury officials.
An Arizona Debt Relief Attorney Can Help Clients Defend Their Legal Rights
The unethical and potentially illegal actions of banks and mortgage servicers that pursue wrongful foreclosures underscore the importance of working with a debt relief attorney as soon as financial troubles emerge. A lawyer who also handles consumer bankruptcy cases can help you understand your full range of options, including lien stripping via Chapter 13 bankruptcy, the automatic stay under Chapter 7 bankruptcy and other strategies to avoid losing your home.
Article provided by Clark Law Offices
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