Millions of homeowners are struggling to get banks to work to modify their mortgages. Yet only 2326 complaints have been filed with the Consumer Financial Protection Bureau. It’s important that the CFPB understands the enormous scope of many homeowners have been victims of unfair and deceptive practices by mortgage banks. If you are a homeowner and feel you’ve been treated unfairly, please be proactive and file a complaint. The CFPB can’t be effective if homeowners don’t file complaints.
The new Consumer Financial Protection Bureau has received about 12,000 complaints over the past six months from consumers who had problems with their credit cards and mortgages, according to the CFPB’s semi-annual report to Congress.
In the half year ending Dec. 31, 2011, the agency received 9,307 credit card complaints and 2,326 mortgage complaints through its website, by phone, and through referrals from other federal regulators, according to the report released Tuesday.
While we all knew the problems in our housing markets were severe — just how severe had never been thoroughly quantified until my office in San Francisco released the results last week of an independent audit of nearly 400 foreclosures over the past three years.
The audit findings show that irregularities are not just frequent — they are pervasive.
Like just about everyone else involved in this issue, I knew there were widespread problems. But the independent audit commissioned by my office showed fully 84 percent of the foreclosure files contained at least one clear legal violation and more than 66 percent of the files contained multiple violations. Nearly 60 percent of documents were backdated in some fashion, which is significant in an environment in which documents are filed under penalty of perjury. As far as we know, this is the first comprehensive audit of foreclosure files.
Why does this matter so much? First of all, the widespread fraud in mortgage lending and documentation that led to the epidemic in foreclosures was abetted by lax legal and regulatory standards that failed to spot, stop and prevent abuse.
Here in California these lax standards are particularly damaging because lenders (and the subsequent mortgage holders who frequently acquire loans) do not need to seek a court order to force a foreclosure. With little direct court oversight, we must rely on the administrative procedures and state regulations to protect owners from fraud.
This matters because families facing foreclosures are entitled to know exactly who holds their loan and to see for certain that the foreclosure is justified. In one case, our audit showed a foreclosure initiated by a party that had no title to the property — and in a number of other cases, we found two competing claims to the title.
This new data matters to all of us because the wave of foreclosures that broke over California affected every single Californian, not just those losing their homes. The massive loss of housing value meant we lost billions in tax revenues needed to fund our schools, protect our communities and invest in our future. And the administrative and recovery costs alone are staggering — with some estimates showing that each foreclosure costs local cities up to $20,000 for each home.
And finally it matters because transparency matters. The state constitution created assessor-recorder offices like mine in every county because economic security and basic justice were advanced by creating clear and transparent property records.
Wells Fargo is blatantly discriminating against our Hispanic client. They clearly qualify for a HAMP loan modification, but Wells Fargo is refusing to modify the loan and postpone the auction that is scheduled for Thursday, February 23, 2012. We are very disappointed with the treatment our clients are experiencing. This loan is predatory and discriminatory. We will update with more information and the complete story tomorrow.
Update: Wells Fargo postponed this auction. The new date is March 26, 2012. Our hope is that Wells Fargo will follow the guidelines and modify this mortgage.
Bruce Judson nails it again! Here is an excerpt from the Huffington Post article. Please see the link at the bottom to read the article in its entirety.
Extreme economic inequality is among the most destructive forces in a society. As inequality grows, it undermines the effective functioning of the economy, the basic tenets of capitalism, and the foundations of democracy.
Unfortunately, the housing crisis and now the housing settlement increasingly look like an example of how this mechanism works.
One of the central characteristics of highly unequal societies is that two sets of laws develop: One set for the rich and powerful and one set for everyone else. The more unequal societies become, the more easily they accept the unacceptable, and with each unrebuked violation, the powerful actors at the top of the society gain an ever greater sense of entitlement and an ever greater sense that the laws that govern everyone else don’t apply to them. As a result, their behavior becomes increasingly egregious.
In contrast, sustainable capitalism requires that all participants in a contract or bargain believe their interests will be enforced equally by the courts: Capitalism requires that Lady Justice wear a blindfold. When powerful players are permitted to alter established rules at will, capitalism ultimately collapses. Contracts and the idea of a fair bargain become meaningless as less powerful parties to an agreement know their rights will not be enforced. Over time, citizens lose faith in government and their own ability to thrive in what becomes a corrupt economy. This uncertainty leads the small businesses, which are so often cited as important to our economy, to shy away from new activities that might put them at the risk of unequal treatment.
I would suggest that the robo-mortgage scandal is a strong indicator that this type of unequal justice is now becoming ever more commonplace in America. Past bank abuses are typically discussed without a sense of outrage. They have, in effect, become a recognized practice of deception with no consequences. Here are three prominent examples from the past few years:
First, the robo-mortgage scandal was discovered. As powerful members of society, the banks effectively decided what laws they wanted to follow and disregarded others. The banks claimed that their violations were technical and harmed no one. Nonetheless, the activities of the banks constituted massive fraud, perjury, and conspiracy. Bank officials have testified in court that they filed as many as 10,000 false affidavits a month. These are effectively undeniable admissions of law-breaking on a massive scale.
It’s a federal crime, punishable by up of five years of imprisonment, to knowingly file a false affidavit with the court. From the perspective of the law, you are guilty of the same perjury, when you falsely testify in court or when you submit a false affidavit. In most states, filing false affidavits with the court similarly constitutes a felony offense of perjury.
If an individual citizen perpetrated this kind of massive perjury, he or she would be prosecuted. For illegal activities to take place on this type of massive scale, other serious crimes, such as conspiracy, are almost certainly committed as well.
By 2009, the adjustable interest rate for Cassandra and Bernard Gray’s Durham, N.C., home loan had spiked to more than 12 percent. “I didn’t know if we were going to be on the street or in a shelter,” Cassandra recalls. “We couldn’t afford groceries. It got pretty bad.”
They were thrilled to sign up for a modification plan with their loan servicer, GMAC Home Mortgage, Cassandra Gray said.
The modification lowered their payment from $1,128 to $768 per month. But after three months, GMAC began returning their payments, the Grays claim in a complaint filed with the North Carolina Commissioner of Banks.
GMAC customer service representatives told them there was a “computer glitch” and that the problem would be resolved. Instead, GMAC twice started a foreclosure action.
GMAC claimed it had no record of any payment being received. The Grays have submitted bank statements that appear to show GMAC returning the $768 payment — several times. GMAC has since assessed more than $20,000 in interest and fees.
“I thought I was doing the correct thing” by obtaining a loan modification, Cassandra Gray said in a recent interview. “But I came home one day and there was a foreclosure notice on my door and a sign in my yard. I called constantly, but it was as if the dots were not connecting.”
A North Carolina clerk of court recently dismissed the foreclosure on grounds that GMAC had not properly demonstrated that it had standing to bring a foreclosure. But once GMAC gets its documentation in order, the loan servicer can foreclose again.
GMAC said it could not comment without borrower consent. The Grays did not sign a form authorizing the lender to talk about their case. But the lender did say that it is “working directly with the borrower to address their claims.”
Since 2007, nearly 9 million homes have been lost to foreclosure, according to data from RealtyTrac. About 4 million are currently in default on or in some stage of foreclosure. Some of these homeowners saw their payments skyrocket, some lost their jobs, and some bought a more expensive home than they could afford.
But many, like the Grays, say that their foreclosures or defaults were triggered by an error made by the mortgage servicing company. Common errors include late fees generated through questionable accounting and imposed without notice, excessive charges for property inspections and maintenance, and inflated or unnecessary attorneys’ fees.
Many homeowners who have tried to correct what seem to be simple accounting mistakes say that the servicers — often, an arm of a major bank — are unable or unwilling to help them resolve even the most basic problems.
“Every time I would call I’d get a different person,” said William Allen, a retiree near Baltimore who is fighting a Bank of America foreclosure. “I worked on it nearly a year and it didn’t do me any good.”
This is an article from 2009 that explains why banks keep homeowners in seemingly never ending trial modifications. This is what happened to Susan Leonard and Michele Varney who were both granted trial modifications with Bank of America.
But industry insiders and legal experts say the limited capacity of mortgage companies is not the primary factor impeding the government’s $75 billion program to prevent foreclosures. Instead, it is that many mortgage companies are reluctant to give strapped homeowners a break because the companies collect lucrative fees on delinquent loans.
Even when borrowers stop paying, mortgage companies that service the loans collect fees out of the proceeds when homes are ultimately sold in foreclosure. So the longer borrowers remain delinquent, the greater the opportunities for these mortgage companies to extract revenue — fees for insurance, appraisals, title searches and legal services.
“It frustrates me when I see the government looking to the servicer for the solution, because it will never ever happen,” said Margery Golant, a Florida lawyer who defends homeowners against foreclosure and who worked in the law department of a major mortgage company, Ocwen Financial. “I don’t think they’re motivated to do modifications at all. They keep hitting the loan all the way through for junk fees. It’s a license to do whatever they want.”
We’ve started a petition for Susan Leonard because she is an excellent example of how banks put homeowners in more jeopardy.We hear different variations of Susan’s story every day.
Susan had surgery, missed time at work which reduced her income. Following her illness she was laid off from her job. She was able to find another job, but the pay is lower which reduced her income significantly. Susan applied for a Homes Affordable Modification with Bank of America and was approved for a trial modification. She was told if she made the three trial payments on time she would be considered for a permanent loan modification.
After completing the trial plan Susan inquired with Bank of America and was told that she was approved for the permanent modification, but because the program was so popular they were having a difficult time getting the permanent loan modification packages out to homeowners. Susan was told to continue to make the trial payment amount each month. Bank of America deceived and mislead Susan into believing she had been approved for a permanent modification for 25 months! She made her 26th payment, but Bank of America sent it back to her and told Susan her home was in foreclosure. On December 21, 2011 her home was sold at auction.
Susan has a very modest home with a $88,000 mortgage. She is a hard working American who wants to pay her mortgage. But Susan’s mortgage had PMI – that’s mortgage insurance. Bank of America would much rather collect on the mortgage insurance policy than work with Susan to keep her in her home. Bank of America put Susan in more jeopardy by leading her to believe that the 26 month trial modification would lead to a permanent modification and then later demanding the arrears. With a reduced income and the belief that she would be paying the new modified payment for the life of the loan, she could not possibly pay the past due amount that Bank of America claimed she owed. Bank of America set her up to fail!
Unfortunately, Susan’s story is not unique.This is happening to homeowners across the country. It’s by far the most common story HSITrust hears from homeowners.
Join us in demanding that Bank of America rescind this wrongful foreclosure and discontinue unfair and deceptive practices against homeowners. Please sign our petition for Susan Leonard.
Help us create change!