Despite Regulations, Banks Continue To Flaunt National Housing Rules
A report published this week shows that four of the nation’s largest banks are continuing to violate the $25 billion National Mortgage Settlement, which was supposed to end the unscrupulous practices that contributed to the wave of home foreclosures after the 2008 financial crisis.
The Washington Post reports that at least 60,000 consumer complaints have already been filed against Bank of America, Citigroup, JPMorgan Chase and Wells Fargo between October and March. Despite an increasing number of consumer and homeowner protections, banks continue to flaunt these rules and pay fines for infractions.
“I think banks like Chase recognize that it’s not hurting their bottom line to pay small fees, slaps on the wrist from the government and the regulators,” said Nick Espinosa, a housing rights advocate for Occupy Homes, to Mint Press News.
Although foreclosure rates are dropping across the U.S. — they are down 28 percent from 2012 levels according to RealtyTrac statistics — there are still 1.3 million properties in some stage of the foreclosure process. Most states have improved when it comes to home foreclosures, but numbers are still elevated. In Minnesota, the number of foreclosed homes fell to the lowest level seen since 2006, but the issue is far from over. According to the Minnesota Home Ownership Center, 17,895 homes were still sold at sheriff’s auctions in 2012 — a number that has improved but still stands 3 times higher than in 2005.
When rules and regulations fail
With ineffective laws and regulations, Espinosa and the burgeoning coalition of housing rights advocates in Minnesota have continued their fight against home foreclosure, recently coming to the defense of Sergio Ceballos, a south Minneapolis resident who faces eviction from his home after JPMorgan Chase failed to negotiate a loan modification.
“For me, this is such a flagrant violation of the national mortgage settlement. Chase Bank is not abiding by the law. It’s clear that laws alone are not enough to stop the banks,” said Becky Dernbach, a member of Occupy Homes, to Mint Press News.
Ceballos has lived in his home with his three children for the past 12 years. After a divorce caused him to fall behind on his payments, he attempted to negotiate a loan modification for more than two years. During that time, Chase reportedly engaged in a practice known as “dual tracking,” prohibited in the terms of the February 2012 National Mortgage Settlement. Dual tracking is a process whereby a bank can simultaneously negotiate a loan modification with a homeowner while also pursuing an eviction.
“Sergio bought his home for about $150,000, it’s now valued at about $95,000. He went through a divorce that caused him to fall behind on payments. From there he tried to get a loan modification for over 2 years,” Espinosa said. “There was a lot of back and forth, they lost his application several times. We’ve heard this story so many times.”
Espinosa reports that there were problems all along the way in the process. Ceballos, who is not a native English speaker, repeatedly requested to speak with a bank representative who could converse in Spanish.
“He was asking for someone to get in touch with him who spoke Spanish. Those requests were ignored. It was a botched handling on the part of Chase,” Espinosa said.
“Just days away from reaching a loan modification” that would have helped keep Ceballos in his home, the bank suddenly changed course and reported that they would be proceeding with an eviction against the family.
“In this case we are pretty shocked with the direction. I spoke directly with someone from the executive response team who gave every indication that they were working to loan modification that the eviction would be permanently postponed. Instead of responding to apologize, they simply pushed forward with an eviction. Something seems to have changed in their thinking,” Espinosa said.
The family remains in their home and has refused to leave despite the ongoing eviction proceeding. The Ceballos family could be forced from their residence as soon as July 1.
The case appears to be consistent with a national trend whereby bank practices are out of step with national and step regulations. In Ceballos’ case, the bank was engaged in dual tracking even though it has been outlawed.
“The banks are failing to follow the criteria of the settlement. If laws aren’t going to stop the banks what will?” asked Dernbach.
The magnitude of the housing crisis
Chase’s behavior hasn’t dissuaded the Ceballos family and supporters, who say they are prepared to stand up and defend the home.
“There are people willing to risk arrest. They see this as a clear violation of the law, a stark injustice. It’s a very simple situation where they can afford to pay their mortgage,” Espinosa said.
Using non-violent civil disobedience, home defenders have enjoyed several victories, stopping eviction proceedings against homeowners like Rose McGee. McGee had lived in her Golden Valley, Minn., home for 20 years, making her regularly scheduled mortgage payments. When she lost her job, McGee tried to negotiate a loan modification but fell victim to dual-tracking eviction proceedings. After fighting in court for over a year, she won the right to remain in her home last month after a court-mandated settlement.
The tactic works, but it is a tough road to travel given the nationwide housing epidemic that persists years after the housing bubble. Al-Jazeera reported that the 2008 financial crisis “wiped out $11 billion of personal wealth in the U.S., threw millions out of work, and resulted in the foreclosure of more than 10 million homes.”
It was the largest recession since the Great Depression, roughly 70 times larger than the savings and loan collapse of the early 1990s.
Nearly 5 years later, communities are still recovering and the legislative process is slowly catching up to the reality.
In Minnesota, the Homeowner “Bill of Rights” was passed in May 2013, providing many of the same protections as national regulations.
“The Homeowner Bill of Rights basically outlaws dual tracking. It also mandates that the bank maintains a single point of contact. It gives people a private right of action to sue the banks when they feel something fraudulent has happened in a case. The single point of contact reflects the national standards both with the consumer protection rules and the national,” Espinosa said.
It follows a similar bill passed in California last year that has resulted in a sharp decline in the number of foreclosures across the state. Mortgage News Daily reports that Californians have enjoyed a 39.5 percent decrease in foreclosure filings from December 2012 to January 2013.
“Having that locally will offer one more reiteration in state law that would provide more protection. It is clear that the banks have no intention of following the regulations that they agreed to. Likely it will come down to suing banks,” Espinosa said.
Cases like the Ceballos foreclosure illustrate that even with state and federal regulations, banks continue to disobey foreclosure laws, creating the impetus for groups to continue the fight for housing justice.
“Ultimately we don’t think this is a fight that we are going to win in the court system. For us the battle is going to be won in the neighborhoods in the streets by making it impossible for banks to continue fraudulent practices. We have to fight them in every home, making them stop throwing people out of their homes,” Espinosa said.
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