Home Loan Modifications Slow Because of Banks’ Reticence, Report Says
The New York Attorney General is threatening to sue both Wells Fargo and Bank of America for systematically dragging their heels on the initiation of home loan modifications, as required per the $25 billion national mortgage settlement.
Our Miami foreclosure lawyers aren’t at all surprised to hear that banks are doing all they can to delay or outright avoid negotiations with borrowers because to do so would affect their bottom lines. Never mind the fact that the banks’ own misdeeds are what led to borrowers being unable to pay such high principal balances in the first place. Those mortgage abuses were the reason why the banks had to sign on to this national settlement last year – to right those wrongs.
But they’re not holding up their end of the bargain, according to New York Attorney General Eric Schniederman. His office has received nearly 350 complaints regarding the two banks, which in all cases failed to comply with the timeline requirements of the settlement. Those requirements gave the banks 30 days to respond to borrower requests to reduce either the principal loan balances or the interest rates.
(Florida Attorney General Pam Bondi has gone out of her way to hand the keys to the state over to the nation’s lenders at the expense of Florida consumers).
In many cases, banks are taking months, if they are even bothering to respond at all, Schniederman reported. And this is not just a New York-centric problem. Other states have identified deficiencies that are both similar and recurring involving these same two lenders.
Schniederman fired off a letter to the head of the settlement’s monitoring committee, saying that if these wrongs aren’t righted, his office will sue. Similar refrains were echoed by attorneys general in both North Carolina and Illinois. In the case of the latter, state officials learned that 60 percent of the loan modification files reviewed showed that services did not notify borrowers of missing documents within the applications within the required five days.
These kinds of continued delays do little to help people hang onto their homes. In fact, it pushes them closer to foreclosure.
The monitoring panel will have 21 days to respond to the allegations. It’s worth noting that even Schniederman said that his allegations reflect only a small portion of the systematic violations of these banks. Those that were submitted were collected from legal service providers as well as housing counselors throughout the state.
Both banks offered a non-statement saying they would continue to evaluate opportunities for ongoing improvement, and Bank of America even shot back that it has contributed more than any other service provider to the settlement. It’s true that the firm has contributed some $28 billion of the nearly $51 billion so far issued through refinancings, short sales, forbearance assistance and loan modifications. However, it was also one of the largest offenders in the wake of the housing market collapse.
Let’s not forget also that while $28 billion seems like an awful lot of money, the bank rakes in about four times that much in a year.
By comparison, Citigroup has provided about $3.2 billion; Ally Financial $657 million; Wells Fargo about $5.7 billion; JPMorgan about $11 billion.
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.