Feds Put Mortgage Lawsuits Under the Microscope

WASHINGTON -- Federal bank regulators are scrutinizing more than 150 home loan-related lawsuits directed at lenders and mortgage companies, a top official at the Federal Deposit Insurance Corporation plans to say Thursday, underscoring the threat the largest U.S. banks face from faulty and improper mortgage and foreclosure practices.

The revelation will likely add to large banks' woes, as the five biggest servicers -- Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial -- currently face up to $30 billion in penalties from state attorneys general and federal agencies for wrongful foreclosures and other mortgage-related misdeeds.

Lenders and servicers, which collect borrowers' monthly payments and foreclose on them when they fall behind, face 67 pending class-action suits in more than 20 states that challenge foreclosures based on so-called "robo-signing" and other poor documentation practices, according to FDIC Director of Depositor and Consumer Protection Mark Pearce's prepared remarks for a Thursday congressional panel.

The companies face 57 additional suits in 25 states over alleged improprieties resulting from loan modifications in the Obama administration's signature foreclosure-prevention initiative, known as HAMP, and 24 lawsuits over non-HAMP modifications, according to the remarks. Further, investors in mortgage securities have filed 21 suits that allege misconduct and seek to force banks to buy back the loans at face value, an outcome that could cost banks hundreds of billions of dollars.

Read the full story at the Huffington Post.

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S. Adele Doherty

Too Big to Fair, Too Big to Care, Part 2
For Part 1: http://storify.com/dentalwellness/too-big-to-fail-and-too-big-to-care
The interesting thing is that some of these lenders/banks can be so off the wall that they do not think that to whom much is given, much is expected. I remember one of them saying that it was within its right to make derogatory report on one of its customers’ credit file. Remember when it was the banks that needed assistance from the government of the United States, the government was within its right not to help but it did. It gave them the fattest checks to help them overcome their financial difficulties without any condition in the beginning and also went further to protect them in two crucial ways: allowed them to honor their outstanding contracts with others (unless teachers and public workers in Wisconsin that republican governor changed to the detriment of fair play and the workers); and our government insisted that the healthy banks should take the money as well so as to avoid stigmatization of such banks as CitiGroup, JP Morgan, Goldman Sach. The government did not make any bad entries on these bankers’ credit record instead tried to work with them to make them better. You will think that CitiGroup would do the same to its customers, I’d say you are wrong, it’s subsidiary, Citimortgage would not help, it would be too eager to report derogatory entries, it would not write letter to you to explain the problem instead would send you letters so incomprehensible that an English professor would not be able to make a sense of it and when you write for clarification, it would ignore that until you get the big guns like BBB, the U.S. Office of Comptroller of Currency that they suddenly recognize you as a human being like people who work for the company. In the area where government could make a big difference — help for troubled homeowners — almost nothing has been done. Thanks to politicians, Wall Street and their friends at CNBC. The Obama administration’s program of mortgage relief has gone nowhere: of $46 billion allotted to help families stay in their homes, less than $2 billion has actually been spent.

July 11 2011 at 1:26 PM Report abuse rate up rate down Reply