If You Were Foreclosed Upon Wrongly You Should Get Restitution

Posted on April 25th, 2011 in All Articles, Short Selling/Buying.

So, you might be wondering what happened after all the “Robo Signer” mess? Well here is an update. A few weeks ago the Office of The Comptroller For the Currency (OCC), Federal Reserve and the Office of Thrift Supervision, issued cease and desist orders against 14 mortgage servicers/entities to force them to fix problems that the regulators discovered with the foreclosure processes. It turns out that many customers were NOT treated fairly.

John Walsh (part of a quote) the guy in charge of the OCC who headed up the investigation involving the wrongful / abrupt and pre-mature foreclosure of over a dozen lender/servicers said “sales should not have gone forward” because they involved active duty service members, a bankruptcy filing, or approved trial modifications

Regarding his sample used for the investigation, Walsh added “the sample did not capture the full extent of harm to borrowers.”

Well Short Sale Super Man says, Ok. So then get to work and capture it and start talking about short sales and modifications that write down principal to let people move on with their lives.

Now keep in mind when lenders call people “customers” this is not a shopping experience at TJ Max were talking about. When the Feds say “customers” were mistreated and foreclosed upon without correct practice, we are talking damage. Impact. Lives changed. We are talking HOMEOWNERS. People in their sacred space, their HOMES. Yes, and now their houses in many cases are already RESOLD to someone else. And it turns out there were “deficiencies” in quite a few servicers operations, 14 (Yes…FOURTEEN) got many foreclosures wrong.

The cease/desist orders to 14 servicers laid out many procedural reforms and new practices that each of these fourteen services should implement. They did not give a dollar amounts fines yet, but announcements were made that penalties would be forth coming.

John Walsh (this is the guy in charge of the OCC or Office in Control of the Currency with which this investigation derives) described the problems uncovered in the investigation as “extensive.” He says servicers will have to absorb large costs to correct wrongs. Each servicer has to hire a third party company to check their 2009 and 2010 foreclosure files.  So if you were wrongly foreclosed upon this is where you would want to make sure you register your complaint. Cases with borrowers who suffered economic harm as a result of foreclosure processing deficiencies, the servicer is obligated to provide restitution!

BUT. A big but. Who do you think gets to CHOOSE the third party reviewer of each lender?

The lenders (servicers) themselves.

Problem: This is how the rating agencies screwed up and all the fraud of mortgage-backed securities took place, lenders picking their own auditors/rating agencies etc.

This is muck.

These exams that “look back” at 2009 and 2010 lender practices and find all the “robo signer” fraud and short cuts that threw at least hundreds of people out of their homes pre-maturely if not completely erroneously, has to HAVE integrity and transparency or there will be no credibility to the reputation-tarnished institutions involved.

Do you trust them? I do NOT.

They are people, we all are, and we are prone to want to be “right” and they have done wrong and will try to find “gray” areas to hide the mess they made with these files.

Keep in mind THERE IS EVIDENCE that wrongful foreclosures occurred. There were crimes committed. Fraud. Since when can people who broker rules appoint their own JURY? Since the banking industry bought off the government.

Who am I to criticize “the man,” the hegemony that runs everything. After all, lenders are what we need to lend again and supply the lifeblood of the housing industry.

But I need to speak up and say that it’s not right that they are appointing their own boards/companies to review themselves in these “look back” reviews.

John Walsh papered over the lending industry with this comment, justifying the wrong by saying basically they were too busy to be blamed. Listen to this quote, “As bad as the mortgage servicing breakdown was, it was not the cause of mortgage delinquencies that led to the surge in foreclosures. Rather, it was the unprecedented surge in foreclosures that exposed and exacerbated weaknesses that already existed in the process.”

My answer: When in doubt or too busy because you don’t have time to do stuff right, don’t foreclose on someone!!

Stop and breathe.

And more importantly, be open to a short sale when they offer you a buyer.

Provide better communication.

But when in doubt don’t foreclose on them.

If you think you were wrongly foreclosed upon in Illinois call Lisa Madigan’s office immediately and ask for the division that is negotiating the robo signing mess and report / supply materials to report your case.

If you need a great attorney to litigate there are many out there who are picking up the chase.  You can email me for some websites that rate them.

Phil Buoscio – Short Sale Super Man