[Vision2020] Whores Still Loose On The Streets

[Art Deco]

  [image: The New York Times] <http://www.nytimes.com/>

------------------------------
May 8, 2013
Banks Still Behaving Badly By THE EDITORIAL
BOARD<http://www.nytimes.com/interactive/opinion/editorialboard.html>

Attorney General Eric Schneiderman of New York announced this week that he
plans to sue<http://dealbook.nytimes.com/2013/05/06/new-york-to-sue-bank-of-america-and-wells-fargo-over-settlement-violations/>Bank
of America and Wells Fargo for failure to adhere to the terms of a $26
billion settlement that was supposed to provide relief to homeowners and
end foreclosure abuses.

The lawsuits are another sign that more than a year after the mortgage
settlement between five big banks and state and federal officials banks are
still mishandling foreclosures in ways to benefit themselves while harming
borrowers. Mr. Schneiderman is right to object, but the sad truth is that a
concerted government effort to hold banks accountable has never
materialized.

Mr. Schneiderman said Bank of America and Wells Fargo have violated the
settlement’s mortgage servicing standards, which, among other procedures,
set timelines for processing borrowers’ requests for loan modifications.
The timelines are crucial because banks have been notorious for losing and
delaying paperwork, causing borrowers to incur late fees and interest
penalties while falling further behind.

In some cases, such delays have actually pushed borrowers into foreclosure
by inflating loan balances. For banks, foreclosure can be preferable to
modifying a troubled loan because the late fees and interest charges are
paid to the bank when a seized home is sold.

The issues raised by Mr. Schneiderman are not the only ways in which the
settlement seems to be falling short. From data that have been compiled so
far, it appears that banks are directing much of the required relief toward
large mortgages, presumably for higher-income borrowers. That would be
another blow to lower-income borrowers, many of them minorities, who were
hit hardest by predatory lending and abusive foreclosures.

It also appears as though banks may be urging borrowers who owe more on
their mortgages than their homes are worth to sell their homes at a loss
via short sales when those borrowers could qualify for loan modifications
instead. In addition, there is evidence that banks may be structuring the
mortgage aid so that they get credit under the settlement for taking
action, even when the relief is insufficient to prevent foreclosures.

When the settlement was reached last
February<http://www.nytimes.com/2012/02/10/business/states-negotiate-26-billion-agreement-for-homeowners.html>,
President Obama pledged to follow up with an expanded inquiry into mortgage
fraud to be conducted by a task force of state and federal prosecutors and
other law enforcement officials. The lackluster results to date — two
earlier lawsuits by Mr. Schneiderman and two bank settlements with the
Securities and Exchange Commission — might well have happened without the
task force. The Justice Department has yet to bring a case of its own as
part of the task force.

The Consumer Financial Protection Bureau, meanwhile, has issued national
foreclosure rules for banks. Homeowner advocates had hoped that the bureau
would improve on the servicing standards in the settlement. But the new
rules appear aimed as much at preserving banks’ prerogatives as empowering
homeowners.

Mr. Schneiderman’s lawsuits may be able to wrest better behavior from the
banks in the short run, especially if other state prosecutors follow his
lead. But the potential for continued abuses is still greater than the
promise of true accountability, reform and redress.


-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/vision2020/attachments/20130509/10828f31/attachment.html>