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Florida Foreclosure Payouts Pale in Comparison to Consultant Checks

Before anyone begins applauding banks or federal regulators for righting the wrongs of the foreclosure crisis through a recent $9.6 billion settlement, consider this:

The average homeowner who was wronged by lenders will receive anywhere from $300 to $1,000, while the consultants originally tapped by the banks for the botched foreclosure review received more than $2 billion.

Our Miami foreclosure lawyers can’t say we’re surprised by the glaring disparity. Rather, it’s merely the latest in a long list of ways in which homeowners have been given unequal treatment by institutions deemed not only too big to fail, but also too big to prosecute.

You may recall that the foreclosure review was part of an earlier settlement ordered by federal regulators against more thank a dozen lenders. The banks were ordered to hire independent consultants who would come in, review the loan files and determine which foreclosure cases warranted compensation, and which did not.

Several problems emerged with this whole process. First, the consultants weren’t actually “independent,” as they were being paid astronomical sums by the banks. As such, they were skewing the results in favor of the banks, which in some cases had provided “default” answers to the forms these consultants were required to fill out.

These consultants were paid about 20 percent of the entire settlement amount, despite the fact that they were found to be egregiously unethical. Meanwhile, homeowners got a pittance. Of that $9.6 billion, only $3.6 billion was given to some 4 million homeowners.

The rest of the money has gone to credit banks for negotiating loan modifications and the like to help people stay in their homes. Except banks are too often taking the back door out with this, receiving credit for short sales – which don’t keep people in their homes – or forgiveness of second mortgages, which do nothing to help people keep up on their payments.

As a further slap in the face, federal regulators are refusing to release the solid evidence of consultant impropriety to the homeowners who want to go after the banks in court.

Essentially, the government is helping to protect the banks from further litigation, to the detriment of law-abiding taxpayers.

Regulators have even attempted to downplay the rate of consultant error that was later found with a government audit. It fluctuated from 6.5 percent down to 4.2 percent. However, a review by the Wall Street Journal found it was actually somewhere in the neighborhood of 10 to 21 percent.

In the case of JP Morgan, for example, the consultants reported that the bank had only erred in 0.6 percent of foreclosures – a figure that clearly defies all logic, especially when you later learn that some consultants were given gift cards worth hundreds of dollars by the banks for “expeditiously” completing certain reviews.

Because let’s not forget that what started all of this in the first place: The banks’ abhorrent business practices, from signing over mortgage to anyone with a pulse to filing fraudulent and forged paperwork in countless foreclosure cases, resulting in people being wrongfully evicted from their homes with a foreclosure-stained credit.

If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.

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