Six years into the mortgage meltdown, and over 20 million foreclosures later, the crisis continues. Unabated by government investigations, settlements, and a host of new state laws and federal rules, the major banks continue to foreclose on uninformed and hapless homeowners in violation of state and federal laws. Banks who were bailed out by taxpayers (the very taxpayers bank are illegally foreclosing on), promised to work with struggling homeowners to try to achieve a workout or modification of the loan.
This was the quid pro quo, between the banks and the public, but the banks have not kept their end of the bargain. Instead, after receiving bailout money, the banks continue to foreclose at a record pace, while pretending to negotiate in good faith with homeowners.
During the years of 2009 to 2011, the banks violated many federal and state laws, and also in the manner in which they went about the foreclosure process. In a settlement with the United States Treasury, Office of the Comptroller of the Currency, the bank entered into a consent degree in which they agreed to a variety of procedures to insure compliance with various state laws relating to the foreclosure process. However, after another year of violating various laws and committing the notorious practice of “robo signing” (signing foreclosure documents without reviewing for accuracy) and forging loan documents, the banks entered into another settlement with the 50 state attorney generals, agreeing to many procedures designed to prevent illegal foreclosures and to maximize the opportunity of a homeowner obtaining a loan modification. Banks also agreed to stop the “dual tracking” practice, where banks pretending to review a homeowner for a loan modification, proceed to foreclose upon the home in many instances without the homeowner’s knowledge.
Banks also continued to violate the “specific point of contact” settlement provision, thus increasing the frustration of the homeowner who is unable to speak to a bank representative to discuss the status of her loan modification application.
Today, in the great state of California, where I have been practicing litigation for over 20 years, banks continue to violate their promises from HARP to the last mortgage settlement. After reviewing hundreds of loans and the banks foreclosure procedures, I am willing to say, at least as far as the major banks, not more than one percent of loans foreclosed upon are in compliance with either laws governing loan origination, loan servicing, or foreclosure procedures after. After reviewing many hundreds of foreclosures, I personally have not seen a single one where the major banks didn’t substantially violate the law.
The fact that individuals have not been criminally prosecuted is not only a national disgrace, but undermines the basic fundamental principle of our democracy that no one is above the law and all are to be treated equally under it. How much longer our democracy can exist with this injustice eroding, it is anyone’s guess.
Stephen R. Golden