US Banks Could Soon Face Sanctions for Foreclosure Violations

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Feb 21st, 2011 @ 5:35 AM by Debbie Dragon
Last fall federal investigators began looking at 14 of the largest banks in the US, including Bank of America, Citibank, Wells Fargo, JP Morgan and more. Allegations had been made that the banks had wrongfully foreclosed on homes across the country. As a result Attorney Generals in all 50 states and the Federal Government began to carefully look at foreclosure proceedings and whether or not they were lawful. US regulators are now getting ready to sanction some of the banks investigated.
Banks were being accused of illegally foreclosing on homeowners by taking shortcuts in order to speed up foreclosure proceedings. One accusation is that they used "robo-signers" for the signing of hundreds of documents that had not even been read and then foreclosing on homes without any proof that they had the right to do so or even owned the mortgage.
Acting Head John Walsh, of the Office of the Comptroller of the Currency, said this week that the national probe into foreclosures that looked into the procedures and paperwork did indeed find that there were laws broken and that there were some homeowners who were wrongfully evicted from their homes. Banks, instead of foreclosing under means of quality or accuracy, instead took shortcuts aiming for speed and cost efficiency.
Walsh said in congressional testimony, "These deficiencies have resulted in violations of state and local foreclosure laws, regulations, or rules and have had an adverse affect on the functioning of the mortgage markets and the U.S. economy as a whole.”
Bad behavior varied from one bank to another and the investigation did find that many of the foreclosures in question did include very delinquent loans. While it was a small percentage overall of homeowners foreclosed on that should not have been, there were violations none the less.
In terms of penalties to the banks found in violation, The Commissioner of the Federal Housing Administration, David Stevens said that penalties will vary and could include fines due to the government, modifications to loans, or even forgiveness in principal balances. He went on to say, “There are a variety of discussions. There are different views.” Final decisions still need to be made.
About Debbie Dragon
Debbie Dragon is a full time freelance writer and the co-owner of ReliableWriters.com.
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