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Boxer urges investigations into banks' mortgage pact adherence

April 12, 2013|By E. Scott Reckard
  • A "bank owned" sign hangs in front of a foreclosed home in Miami.
A "bank owned" sign hangs in front of a foreclosed home in Miami. (Joe Raedle / Getty Images )

Saying too many homes have been lost “to bank malfeasance or error,” Sen. Barbara Boxer called for federal investigations into whether banks are breaking the consumer-protection pledges they made in last year’s $26-billion settlement of foreclosure-abuse investigations.

 “I am extremely concerned over reports that banks continue to violate the rights of homeowners and the terms of the National Mortgage Settlement,” Boxer (D-Calif.) said in a letter to U.S. Atty. Gen. Eric Holder,  Secretary of Housing and Urban Development Shaun Donovan, and Joseph A. Smith, the official monitor for the settlement.

The letter included a link to a Times report last week on a survey of housing counselors which found that the mortgage-servicing arms of five major banks were not complying with key provisions of the settlement. Smith said at the time that the findings “are consistent with much of what I’ve heard as I’ve traveled the nation in the past year.”

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The settlement by Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc. and Ally Financial Inc. ended investigations by 49 states and the agencies headed by Holder and Donovan.

“As a condition of the [settlement], participating banks agreed to ensure certain basic consumer protections in exchange for legal relief,” Boxer said. “However, while the banks have been relieved of that legal uncertainty, struggling homeowners continue to face a seemingly patchwork system that leaves them at risk of losing their homes.”

Holder and Donovan couldn’t immediately be reached for comment.  In an email, Smith said he shares Boxer’s concerns and hopes to discuss his findings with her when he issues his first settlement compliance report next month.

“I continue to believe there are areas in which the banks must improve their treatment of their customers,” Smith said. “And as the monitor of the settlement, I intend to hold them fully accountable."

The survey, conducted by the California Reinvestment Coalition, found that large majorities of counselors reported that the banks still frequently fail to:

  • Provide borrowers with a single point of contact who is accessible, consistent or knowledgeable;
  • Halt the practice known as dual tracking, when a foreclosure process proceeds while the borrower is negotiating in good faith for a loan modification;
  • Observe timelines for responses and decisions on applications for loan modifications.

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Boxer said the survey also found that the banks continue to lose documents and improperly deny borrowers the assistance they seek to stay in their homes, “causing unnecessary harm to families, neighborhoods, and the state's economy.”

“I strongly urge you to investigate the violations reported in this survey and to hold the banks accountable by taking strong enforcement actions,” she wrote. “Too many Californians already have lost their homes unnecessarily during the foreclosure crisis due to bank malfeasance or error."


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