"Report Finds Banks Continued Abusive Practice After Foreclosure Settlement"
The nation’s five biggest banks signed a settlement in February with the Department of Justice and most of the nation’s state attorneys general that allowed the banks to avoid going to court for their role in the foreclosure fraud scandal. Under the terms of the settlement, the banks agreed to pay $25 billion and end certain abusive practices.
However, a new report from the California Monitor, an office overseeing the settlement, found that the banks continued at least one pernicious practice until the last possible moment:
The Settlement provided banks with an implementation period to change their practices. Banks agreed to make all changes by one of three deadlines: 60 days, 90 days, or 180 days. While some changes, such as implementation of a single point of contact for borrower communication, occurred quickly, the banks have taken the full 180 days (six months) to stop dual tracking. This is permissible under the Settlement.
But this waiting has been painful for homeowners, whose fate is uncertain under the dual track regime. To date, dual tracking has continued. As the graph illustrates, the California Monitor Program has received dozens of requests for help each month from families who have submitted loan modification applications but fear that foreclosure will occur, despite their hard work. In August, 25% of complaints received by the California Monitor stated a dual tracking problem.
“Dual-tracking” is the practice of continuing the foreclosure process even as a homeowner is being evaluated for a mortgage modification. It has caused problems for borrowers with several large banks, and results in borrowers faithfully making payments while awaiting a permanent mortgage modification, but seeing their homes foreclosed upon and sold out from under them anyway.
California outlawed dual-tracking entirely in its recent Homeowner’s Bill of Rights. And as this report from the California Monitor shows, banks aren’t willing to end dual-tracking until the law forces them to do so. (HT: Ben Hallman)