Statistically, America may be digging out of the foreclosure quagmire caused by subprime mayhem and the subsequent collapse of the housing bubble, but on a human scale, banks continue to wrongfully foreclose on homeowners clinging to a loan modification lifeline.
That's the conclusion of a new survey of 260 consumer attorneys in 45 states by the National Association of Consumer Advocates, the National Consumer Law Center and the National Association of Consumer Bankruptcy Attorneys.
The responding lawyers say thousands of homeowners have been improperly foreclosed upon, either while awaiting a loan modification or due to improper fees or payment processing.
In the past year, more than 90 percent of those surveyed say they've represented a homeowner placed in foreclosure while awaiting a loan mod. Of those, 85 percent were representing homeowners awaiting a HAMP loan mod, while 66 percent were representing homeowners with a Fannie Mae or Freddie Mac loan.
More than 80 percent represented a homeowner where a foreclosure sale was attempted while awaiting a loan mod. In all, survey respondents reported representing more than 3,700 homeowners placed in foreclosure while awaiting a loan modification in the past year.
Payment processing snafus live on as well. Among those surveyed, 80 percent of those who represented homeowners placed into foreclosure noted:
- wrongful assessment of late fees, inspection fees, broker-price opinions, attorney's fees and other fees.
- misapplication of payments.
- servicers who did not properly accept the homeowner's payment.
"This survey provides yet more evidence that banks wrongfully foreclose on tens of thousands of homeowners every year," says Diane Thompson, National Consumer Law Center attorney. "Until rigorous national mortgage servicing standards that are enforceable by homeowners are put in place by the federal government, banks will continue to seize homes illegally and routinely."
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