We support reforms to the financial marketplace to curb bad practices by banks and lenders.
It’s been a busy week for new developments affecting mortgage borrowers and homeowners who lost their homes to foreclosure. The Consumer Financial Protection Bureau (CFPB) announced new regulations on January 10 that, when implemented in 2014, will require banks to honestly characterize the full costs of their mortgage loans and lend only to borrowers that have proven that they can meet their loan payments, among other stipulations. According to CFPB head Richard Cordray, these policies are designed to keep borrowers safe from default and to keep the housing market stable. See Consumers Union’s press release about the policies, as well as a report from the Washington Post.
Earlier this week Fannie Mae reached an agreement with Bank of America over bad mortgages that led to record defaults. According to the terms of the settlement, Bank of America will buy approximately 30,000 of the risky loans it had sold to Fannie Mae, and provide additional payouts to it as well. Moreover, Bank of America has agreed to have other firms service many of its loans.
Finally, the Federal Reserve Board and the Office of the Comptroller of the Currency announced a settlement with ten home-loan servicers, including Bank of America, as part of an ongoing effort to compensate mortgage borrowers for wrongful foreclosure procedures conducted by major banks. Aurora, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo also participated in the agreement, which overhauls the Independent Foreclosure Review. Borrowers who lost their homes to foreclosure to these banks between 2009 and 2010 (not just those who applied for the Independent Foreclosure Review) will be eligible for compensation from the $3.3 billion fund. The settlement also requires the banks to set aside$5.2 billion in a variety of non-cash benefits to borrowers with outstanding mortgages that include granting loan modifications.
More announcements may come soon, as according to the OCC and Federal Reserve’s press release describing the settlement, the federal government is still negotiating with other participants in the Independent Foreclosure Review in the hopes that they will join the agreement as well. For more information on this settlement, see the Federal Reserve’s website, as well as ProPublica.
What about people like me? Who did not take out a mortgage I could not afford? I am paying 6.5% interest and when I tried to refinance, I was told that I did not have enough in savings so I was denied a refinance. Even though I will never get back, when I sell what I have into my house and that does not include the three acres I owned prior to building on the land.
A lower interest loan would help me out.
The way I see this is, if I would have done something foolish like buy a home I could not afford I mite be compensated for incompetency.
does anyone know anything about options for reducing principle on home mortgages that were purchased at very high prices, and are now undervalued….owing more than their worth???
I keep seeing all these ‘settlements’ which seem like a ‘slap on the wrist’ at most.
The root of the problem was the lack of accountability of their employees for their actions.
The ‘banks’ per se should see big fines, but where are the fines and jail time for the bank officers and board holders who intentionally established the policies which caused the ‘housing boom’???
The settlements barely scratch the surface and haven’t stopped the banks from simply spending money on lobbyists and devising ways around any meaningful regulations they don’t manage to kill in Congress.
Eric Holder and the President should be held accountable for failing to prosecute the people who profited so outrageously from their irresponsibility. Sure the budgets for the IRS and Justice were cut to the bone, but funds could be shifted to rebuild the teams necessary to build these complicated cases. Take money from drug enforcement would be a good start particularly since getting the funds replaced by Congress for that would be a snap.
So don’t proudly announce the wonderful job of addressing the failures of regulation and flowering of greed when none of the ‘settlements’ do either. The only ones hurt remain the people who were led into foreclosure and the bank stockholders.
Its about time! I hope the changes will protect the borrowers from the shady loan sharks. I had a home foreclosed on after I was told I was all set with a loan modification. I had no legal recourse!
Finally I can feel safe about getting my house sold without someone basically stealing all of my money and investments that I made into the house.