(Mint Press) – In a boost to Wall Street, critics arguing for more regulation on the banking industry, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo have uncovered that they have foreclosed on more than 700 active members of the military during the housing crisis and seized homes from about two dozen other borrowers […]
(Mint Press) – In a boost to Wall Street, critics arguing for more regulation on the banking industry, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo have uncovered that they have foreclosed on more than 700 active members of the military during the housing crisis and seized homes from about two dozen other borrowers who were current on their mortgage payments. This new finding vastly overshadows previous estimates.
The banks discovered these foreclosures while analyzing their own mortgages as part of a multibillion-dollar settlement deal with the federal government. Regulators turned to the banks for self-review after an independent foreclosure review failed to efficiently offer relief to consumers. In a $3.6 billion settlement to help aggrieved homeowners, banks were asked to analyze each loan to determine the correct size of the payments due to homeowners.
The analysis, turned over to regulators for review, reveals for the first time the extent of wrongdoing done by the banks. While the banks previously stated that faulty documents were the cause of the errant foreclosures, the lenders now admit that borrowers were rarely evicted by mistake.
This helps to explain why the banks offered so little relief to homeowners during the housing crisis. Housing advocates feel that the findings reveals broader flaws in the settlement with the federal government. The banks were able to secure favorable terms for offering a minimal amount of aid.
Foreclosures against active servicemen are banned, according to the Servicemembers Civil Relief Act (SCRA). The SCRA requires banks to seek court permission before foreclosing on active-duty military personnel’s housing. JPMorgan Chase, Wells Fargo and Bank of America each foreclosed on about 200 servicemen in violation of the SCRA and Citigroup had 100 such violations.
The banks have expressed their regrets about these violations, while maintaining that these foreclosures constitute a small percentage of cases that they have reviewed. “Wells Fargo is honored to serve the needs of the men and women who defend our country, we take our responsibilities under the Servicemembers Civil Relief Act very seriously and we regret any hardship that has been caused,“ said Vickee Adams, a bank spokeswoman.
JPMorgan Chase has stated that it has instituted a “very generous programs for the military, including awarding homes, forgiving principal and hiring more than 5,000 veterans, Kristin Lemkau, a spokeswoman for the bank, offered. “We have remediated these errors and plan to appropriately compensate anyone whom we made a mistake with.”
In regard to its commitment to meeting its legal and ethical obligation to military personnel, Steve Kevelighan, a spokesman for Citigroup, stated, “We have taken several measures to enhance our processes and are working with our regulators to ensure they have the information they need to appropriately address these issues and provide restitution for those affected.”
The banks had uncovered 20 borrowers that have never missed a mortgage payment, but had their homes seized nonetheless. The properties for all of these cases have been sold. The banks have also identified a number of foreclosures in which a customer successfully negotiated a permanent lower mortgage payment, but the banks failed to honor the new terms.