Democratic Senator: Investigate Banks For Violating Mortgage Settlement

Sen. Barbara Boxer (D-CA)

Amid reports that Wall Street’s largest banks are violating the terms of the mortgage fraud settlement they reached with the federal government and state attorneys general last year, California Sen. Barbara Boxer (D) is calling on regulators to investigate whether banks are complying with the settlement’s terms and a new California law meant to protect homeowners.

A report issued early in April found that the five banks subject to the settlement — JP Morgan Chase, Ally Financial, Bank of America, Citigroup, and Wells Fargo — have violated it in various ways, including by continuing to foreclose on homeowners even as they seek loan modifications. That process, known as dual tracking, was banned by California law in 2012 and prohibited by the settlement. In a letter to federal regulators last week, Boxer called for an investigation into the practices, The Hill reports:

It is essential that you take swift action to ensure that the banks are meeting their obligations under the terms of the settlement and that struggling homeowners receive the assistance they need,” Boxer said in a letter to Attorney General Eric Holder, Secretary of Housing and Urban Development Shaun Donovan and National Mortgage Settlement Monitor Joseph Smith on Friday.

“Too many Californians already have lost their homes unnecessarily during the foreclosure crisis due to bank malfeasance or error,” she wrote.

Reports have also found that banks are still discriminating against minority homeowners, as they did in astounding numbers before the housing crisis, and are failing to sufficiently provide relief required by the settlement.

The reports are yet another indication that the mortgage settlement is coming up short of its goals, as banks have found various ways to get around the requirements that were meant to make them pay for the fraud, abuse, and discrimination they perpetuated before the housing bust and during the foreclosure crisis. Dual tracking and other practices were responsible for an untold number of improper and potentially illegal foreclosures, but after months of banks lagging on their obligations, it now seems the settlement hasn’t yet put an end to the practices.