Scams and Thievery
by digby
Dday comments on today’s better-late-than-never NY Times story about banks burglarizing houses that they say are in foreclosure:
Over the past few months, we’ve been following perhaps the worst abuse by the banks in the foreclosure crisis – breaking and entering homes where they are foreclosing, changing the locks, and terrorizing the owners. The banks claim that they only do this with vacant homes, in an effort to keep out squatters, but it hasn’t worked out that way. There have even been reports of break-ins on homes where the borrowers are current on their payments. Borrowers who have seen their homes broken into are fighting back and even suing the banks over this practice. If signing false documents and lacking standing to foreclose is too technical for the courts, perhaps breaking and entering will be what stops the banks’ reign of terror.
When Mimi Ash arrived at her mountain chalet here for a weekend ski trip, she discovered that someone had broken into the home and changed the locks. When she finally got into the house, it was empty. All of her possessions were gone: furniture, her son’s ski medals, winter clothes and family photos. Also missing was a wooden box, its top inscribed with the words “Together Forever,” that contained the ashes of her late husband, Robert. The culprit, Ms. Ash soon learned, was not a burglar but her bank. According to a federal lawsuit filed in October by Ms. Ash, Bank of America had wrongfully foreclosed on her house and thrown out her belongings, without alerting Ms. Ash beforehand.Ash was in the middle of working out a loan modification when this happened. “This is in essence a burglary,” Ash remarked. The bank took her late husband’s ashes.
But it doesn’t look like there’s going to be any concerted effort to fix any of these problems — if the Fed has its way anyway:
Top policymakers at the Federal Reserve are fighting efforts to rein in widely reported bank abuses, sparking an inter-agency feud with the FDIC and the Treasury Department. The Fed, along with the more bank-friendly Office of the Comptroller of the Currency, is resisting moves to craft rules cracking down on banks that charge illegal fees and carry out improper foreclosures. The FDIC supports such rules, according to an FDIC official involved in the dispute. The new regulations would rein in debt collection, loan modification and foreclosure proceedings at bank divisions called “mortgage servicers.” Servicers have committed widespread fraud in the foreclosure process. While the recent robo-signing of fraudulent documents has received the most attention, consumer advocates have complained about improper fees and servicer mistakes that lead to foreclosure for years. “Given that we’ve seen a massive failure in servicing practices and a massive failure to address servicing in an honest way, I think this is important,” says Joshua Rosner, a managing director at Graham Fisher & Co., and longtime critic of the U.S. mortgage system. Last week, the National Consumer Law Center and the National Association of Consumer Advocates published a survey of 96 foreclosure attorneys from around the country, attesting that servicers have pushed 2,500 of their clients into the foreclosure process, even as the borrowers were negotiating loan modifications with the same servicers.
The Fed is run by bankers, after all …
I think this story tells itself. But if you haven’t been following the details I highly recommend dday’s coverage on this over the past few months if you want to catch up. It’s an astonishing story.
Meanwhile, the wonks at Naked Capitalism have put together a petition to ask the regulators to do their jobs.
As readers may know, the banking industry is trying to prevent the FDIC from moving forward with its proposed reforms on securitizations and is also attacking related SEC reforms, namely amendments to Rule A/B. To further the effort to curb servicer abuses, please visit the website, StopServicerScams, and sign the petition. As we have written, and as experts and foreclosure defense lawyers have reported in Congressional testimony, and as pending lawsuits by attorneys general in Arizona and Nevada allege, servicer abuses are a significant cause of foreclosures. These include including delaying and misapplying payments, using false hopes of pending mods to extract more payments from consumers, and applying compounding junk fees. We will submit the signed petition in early January. Thanks for your support in this important effort.
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