Federal officials announced this week that they have reached a $25 billion settlement with the five largest mortgage servicers in the country for “loan servicing and foreclosure abuses.” The breakdown is as follows: Ally Financial ($207M), Bank of America ($175.5M), Citigroup ($22M), JPMorgan Chase ($275M), and Wells Fargo ($87M).
Robo-signing refers to the practice of bank employees signing mass amounts of foreclosure documents without verifying the information. There are numerous accounts of these instances. Beth Ann Cottrell, a manager at JP Morgan Chase, stated in a court deposition that she and a team of 8 others signed upwards of 18,000 documents a month without personal review, many of which were foreclosures or critical affidavits of indebtedness. In another instance, Erica Johnson-Seck, an employee of OneWest Bank, estimated she signed about 750 foreclosure-related documents a week, spending about 30 seconds on each one.
Oftentimes, the people who signed these documents were not even properly authorized to do so, resulting in homes that were fraudulently foreclosed on.
Once these practices were brought to light, four major banks, J.P. Morgan Chase, Ally Financial/GMAC, Bank of America and Wells Fargo halted foreclosure actions in 23 states (BOA halted foreclosures in all 50) because some of its employees “might have improperly prepared the necessary documents.”
Now they are paying the price for their actions.
Federal officials announced this week that they have reached a $25 billion settlement with the five largest mortgage servicers in the country. The breakdown is as follows: Ally Financial($207M), Bank of America ($175.5M), Citigroup ($22M), JPMorgan Chase ($275M), and Wells Fargo ($87M).
The $25 billion will be distributed in two ways: $20 billion is designated for financial relief to borrowers, and $5 billion in cash will go directly to federal and state government agencies.
Have I Been Robo-signed?
Robo-signing is usually difficult to trace. It requires analyzing a paper trail of signatures in order to determine whether or not the signatory has legal authority. But as the courts filter through these documents, even more complex issues have begun to arise.
As Carlin Phillips, a wrongful foreclosure attorney explains, recently there have been instances of homeowners that were foreclosed on receiving notices from the bank giving them their house back. These notices of rescindence, or wrongful foreclosure, come up to a year after the homeowner has moved out, and in many cases cause more harm than good.
These homes, which have been sitting empty for months, often fall victim to vandalism, illegal activity, and disrepair. The homeowner is then abruptly saddled with the damaged property and forced to pay taxes on it.
Hopes are that new standards and regulations will prevent cases like this from happening again. President Obama recently announced the Home Owner’s Bill of Rights, a set of standards that call for increased communication between banks and homeowners, the discontinuation of dual-tracking (when a home is foreclosed on while the owner is in the process of negotiating a loan modification or bankruptcy), and proper documentation procedures for foreclosures.