Tumblr Icon RSS Icon

Bank Contractors Have Broken Into Hundreds Of Homes Since 2008

Posted on  

"Bank Contractors Have Broken Into Hundreds Of Homes Since 2008"

Share:

google plus icon

foreclosefeatureContractors hired by giant financial companies to manage abandoned and defaulted homes have broken into hundreds of the wrong private homes due to incorrectly identifying addresses and other basic errors, the Huffington Post reports.

When a bank or other financial company sees that a mortgage it owns has gone into default, it begins checking to see if the residents have abandoned the property. If they have, it takes responsibility for the upkeep of the property in order to protect its investment and the property values of surrounding homes. That work is often done on a contract basis by companies like Safeguard Properties, which has been sued at least 135 times over wrongful break-ins conducted in pursuit of property management contracts with banks, according to reporter Ben Hallman’s review of court filings around the country. In total, more than 250 lawsuits have been filed in 31 different states over the past five years.

In some cases contractors go to the right address but break into a home that isn’t yet bank owned and cause damage that destroys the owner’s ability to sell the house at a loss – a move which dampens the damage to a borrower’s credit score compared to entering foreclosure.

The problem stems from cost-cutting behavior and lax oversight of the property management companies themselves. Companies like Safeguard Properties “solicit workers to inspect homes for as little as $1 to $2 each” on online forums. Cutting corners in the inspection stage leads to incorrect work orders being filed, which leads to workers breaking into supposedly abandoned homes only to find them occupied. While workers are supposed to leave upon finding evidence that the inspector who referred them to the home was incorrect, Hallman relates multiple examples of homeowners who were effectively burgled by bank agents who “appear to see a fully stocked home as an opportunity to loot valuables.”

Safeguard Properties defended its record by saying that the number of errors is minuscule next to their total workload of 1.5 million work orders on abandoned properties in 2012 alone.

There have been plenty of individual stories about this very situation. Katie Barnett of MacArthur, Ohio had her home trashed by bank employees who had come to the wrong address. The bank blamed the error on faulty directions from a GPS unit, but declined to compensate Barnett. And as banks and other financial firms pass around mortgage rights, even families that are current on their mortgages can wake up to learn their house was sold out from under them due to shoddy paperwork. The Sinclair family of Altadena, California had their home sold despite being current on payments for their modified home loan. The Sinclairs tried to warn the company of the problem, but couldn’t get someone to talk to them on the phone. Jo-Ann Seipp of Florida told ThinkProgress a similar story of wrongful sale despite being current on her mortgage in June. Wells Fargo sold her house to an investment firm even after she paid up and they told her they had stopped foreclosure proceedings. Etienne Syldor, a bus driver at Walt Disney World in Orlando, had his home foreclosed despite being ahead on his mortgage payments and paying more than was required by the contract.

The foreclosure crisis has meant a boom in business opportunities for unscrupulous companies that do the ground-level work of making the foreclosure machine churn. A pair of Colorado companies were accused this summer of inflating what they charge homeowners to post legal notices in a scheme that brought multi-million-dollar profits to the firms. A host of non-bank mortgage servicing companies have sprung up to buy thousands of mortgages from originating lenders and big banks at fire sale prices and then flip them for a profit. These companies’ hasty work ethic combined with the fact that trillions of dollars’ worth of mortgages lack the proper legal documentation to prove which company has the rights to the loans means chaos for homeowners.

« »

By clicking and submitting a comment I acknowledge the ThinkProgress Privacy Policy and agree to the ThinkProgress Terms of Use. I understand that my comments are also being governed by Facebook, Yahoo, AOL, or Hotmail’s Terms of Use and Privacy Policies as applicable, which can be found here.