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Lenders Reach Settlement With Federal Regulators – But Still Face Probe

By
Real Estate Agent

Yesterday it was announced that some federal regulators had reached settlement with 14 of the nation's largest financial institutions.  The agreement involves banking companies and lenders, led by Bank of America, Wells Fargo, JP Morgan Chase and Citigroup, which agreed yesterday to compensate borrowers who were wrongly foreclosed upon.  Fine amounts are to be determined later.

Officials also disclosed the settlement does not mean an end of a wide-ranging probe into questionable lending practices and wrongful foreclosures.

Prospect of an even tougher settlement looms large with a second group that includes all 50 state attorneys general, the Treasury and Justice departments, the Federal Trade Commission, and others. 

The order showcased results of investigation into abusive industry practices which included document forgeries and "robo-signing" of foreclosure paperwork that has come to public attention the last several months. In addition, the investigation found court filings that weren't properly notarized, mortgage documents that weren't transferred properly, inadequate staff for the foreclosure process and lack of oversight of outside firms.

"These deficiencies represent significant and pervasive compliance failures and unsafe and unsound practices at these institutions," the Fed said in a statement.

Alys Cohen, a staff attorney for the National Consumer Law Center, stated, "The problem with the settlement is that it doesn't provide any details, and therefore homeowners have no guarantee that they'll be given a fair shake by the banks,"  She went on to say, "All the banks have agreed to do is follow the current law, which doesn't adequately protect homeowners."

5 million homes have been estimated lost to foreclosure since 2006, when the housing market collapsed after a wave of rogue lending.  2.4 million mortgages were roughly estimated to be in foreclosure at the end of last year.  Another 2 million were 90 days or more past due, and at serious risk of foreclosure.

There is an extensive report of these developments via Yahoo News at: "Mortgage Lenders Settle But Still Face Probe."

Posted by

Myrl Jeffcoat ActiveRain Signature
  

Comments (14)

John Saari
Worcester, MA
"The Mortgage Buddy"

Such a mess Myrl. Everyone was to blame but they have to point the finger somewhere. From us to the buyers to Congress. Too much money in too short a time.

Apr 14, 2011 10:22 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

John - Your "Too much money in too short a time" statement is so true.  I also think there are not enough fingers to point in the direction of blame.  I keep wondering how it was we came so short on integrity that we find ourselves in this position.

Apr 14, 2011 10:34 AM
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Myrl from your description the settlement sounds like a wrist slap.

Apr 14, 2011 10:50 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Gary - I think the public will need to ride herd on the regulators in order to make certain teeth are exhibited to all this.  I share your take about it being a wrist slap.  The red tag for me, was the caveat, "Fine amounts are to be determined later."  This must not become a case of out of sight - out of mind.

Apr 14, 2011 12:11 PM
Juli Vosmik
Dominion Fine Properties - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

Myrl, so why don't the banks help in another way - we all know they're understaffed.  Hire more people!!!!  That would help bolster the economy and will probably be a TON cheaper than any lawsuits.  Well, maybe not, they've gotten away with too much so far!!!  Nevermind this comment - just wishful thinking.

Apr 14, 2011 02:01 PM
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

To answer Juli, the banks,TBTF's don't have to do anything they don't want to. This settlement is the biggest insult, sh$% barge to anyone with an IQ over 60. That might be 1/4 th of the US population. Slap on the wrist, they don't even get a paper cut from this massive theft/ponzi. NO MONETARY PUNISHMENT??? No one goes to jail. This is the biggest "land grab" in the history of the US.

I can't believe we're taking this utter mega insult. But, don't worry, NAR';s on the case. Only if they hijack $40 from all of us.

Myrl, did you actually read the 28 page filing, not just the abstract from Yahoo?

It reminds me of one of the best quotes from George Orwell's 1984:

"In a way, the world-view of the Party imposed itself most successfully on people incapable of understanding it. They could be made to accept the most flagrant violations of reality, because they never fully grasped the enormity of what was demanded of them, and were not sufficiently interested in public events to notice what was happening. By lack of understanding they remained sane. They simply swallowed everything. . ."

Apr 14, 2011 04:35 PM
Jack Mossman - The Nines Team at Keller Williams in Stockton
The Nines Team At Keller Williams - Stockton, CA
The Nines Team at Keller Williams in Stockton

Myrl ... My jury is still out ... all I've heard for the last year about "we are working that out" from the lenders .... and then this morning from Chase... (paraphrase) "it will have a dramatic affect on our lending practices ...." 

Apr 14, 2011 04:56 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Juli - In one news report, a bank spokesperson lamented that it would cost $1 Billion to ramp up with more staff. . .So the question looms: How many billions did the bank bailouts cost taxpayers?  It was in the hundreds of billions if not thousands of billions.  I can't shed tears over a billion.  Can you?  They have gotten away with bringing not only this country's economy to the brink of collapse, but the economies of other countries as well.  And the economy of Iceland was sent back to the Dark Ages.

Mike - I haven't actually read the entire 28 page filing - but I need too.  I've been following this story for months now. . .What worries me most is that I see no safeguards on the horizon to keep this from all happening once again.  These schemes revisit themselves on the people about once every 7 years or so.  They have come in the form of the Junk Bond fiasco, the Savings & Loan disaster, the Dot.Com bubble, and a number of others.  Your George Orwell quote is a comment on the world we live in today.

Jack - When I saw the sentence, "it will have a dramatic affect on our lending practices ...."   I can only comment, YA THINK!  Unfortunately, I don't see anything happening that is going to create that change in their lending practices.  As long as greed and lack of integrity exists in a world where individuals can exploit it, they will.  Wall Street and the Banking Industry continues to lobby and fight re-regulation tooth and toenail.  It is estimated they have 6 lobbyists for every Congressman in Washington.  Our $40.00 to NAR certainly won't outgun that.  It would be like taking a water pistol to a nuclear weapons war.

Apr 14, 2011 05:22 PM
Judi Boad
ACCURATE REALTY GROUP - Seattle, WA

Hi Meryl,

History will lay out this story for future generations.

I shudder to think we are incapable of comprehending the flagrant violations of humanity as Mike put it. 

Thank you for the link to an important topic we should all take the time to grasp!

Have a wonderful weekend.

See you in the rain...

Apr 15, 2011 06:43 AM
Tom Braatz Waukesha County Real Estate 262-377-1459
Coldwell Banker - Oconomowoc, WI
Waukesha County Realtor Real Estate agent. SOLD!

Myrl

Really a big mess indeed, I feel it ios going to get a lot worst yet

Apr 15, 2011 03:43 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Judi - I think you are right that these times will be memorialized for generations.  I don't know if it is totally an incapacity to comprehend, as much as folks simply feel powerless to stop the voilations of humanity.  I know there are times when I feel like I'm standing next to a train track, witnessing a train wreck I can do nothing about.

Tom - I agree that it could get worse yet.  Earlier this week, I was checking status of about 20 houses on one street in our town.  Three of them are on the market for sale.  Two are bank-owned foreclosures, and one is a short-sale.  The two bank owned properties are now in "pending" status.  The "short-sale" has been on the market over a year.  It was pending with "back-up" status, but that has fallen through, and is back to active once again.  BUT here's what got my attention, while looking at the property rolls on all properties for this particular street, I found 4 other properties in either "pre-foreclosure" or "auction" status.  The so called "shadow inventory" is continuing to be a threat and rear its ugly head.

Apr 15, 2011 04:13 PM
Janice Roosevelt
Keller Williams Brandywine Valley - West Chester, PA
OICP ABR, ePRO,Ecobroker

Myrl, I appreciate your report and I am not sure all will be flreshed out - hope we get through this in good enough fashion for everyone to simply do a better and more honorable job.

Apr 16, 2011 09:02 AM
William Johnson
Retired - La Jolla, CA
Retired

Hi Myrl, I particularly liked this sentence. "The problem with the settlement is that it doesn't provide any details.........  leave it to the banks not to be too specific. Guess they still need some wiggle room.

Apr 16, 2011 04:32 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Janice - We seem to be in these cycles where we go through these fiascos every few years.  Each one seems a little worse than the last.  But this one has been the mother of all crashes.  And ethics was parked somewhere while greed had a field day.  Wall Street and the banking industry continues to fight regulation tooth and toenail.  I don't expect they will act honorably, unless forced to.

William - I think the DEVIL will be in the details. . .If they surface at all.  I see the whole thing like trying to treat a really bad infection with antibiotics that the patient won't take.  I continue to worry we will have deja vu all over again in a few years. 

Apr 16, 2011 04:52 PM