With the housing crisis still acting as a drag on the nation’s economic recovery, the White House announced a plan today to assist struggling homeowners and address improper foreclosures. The plan, which requires no Congressional action, will reduce refinancing fees for homeowners with government-backed loans, but the plan’s major focus was on helping military veterans who were the victims of foreclosure fraud, predatory mortgage practices, and other improper foreclosures.
Obama outlined the proposals at a press briefing today, where he called it “unconscionable” that military members were among the worst victims of the foreclosure crisis and the fraudulent practices from Wall Street banks that have occurred during it:
We are going to do this on our own. We don’t need congressional authorization to do it. [...] It is unconscionable that members of our armed forces and their families have been some of those most susceptible to losing their homes through the actions of unscrupulous banks and housing lenders.
In 2010, more than 20,000 active-duty veterans and reservists with government-sponsored mortgages lost their homes, a 32-percent increase from 2008 and the largest loss since 2003. The number could have been worse were it not for Veterans Administration programs that helped 66,000 military families avoid foreclosure in 2010.
Even worse, military members are often victims of foreclosure fraud. In November, federal regulators released data showing that more than 5,000 military members may have been illegally foreclosed upon by the nation’s 10 largest banks, and veterans continue to battle banks to stay in their homes on a daily basis.
Obama’s plan seeks to remedy those problems by providing relief to members who sold their homes at a loss due to a permanent change in station, and provides $10 billion from mortgage servicers to bolster the Veterans Housing Benefits Program. It also draws on the recent mortgage fraud settlement between the government and major lenders to force banks to compensate servicemembers who were improperly foreclosed upon by paying lost equity, plus interest, and $116,785.
In addition to the programs announced today, the Consumer Financial Protection Bureau has been tasked with making sure military members are treated fairly by financial services institutions, while New York Attorney General Eric Schniederman has launched an investigation into potentially illegal foreclosure practices involving veterans.