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Were big banks ‘stealing homes’?

By Jay MacDonald · Bankrate.com
Monday, December 19, 2011
Posted: 10 am ET

Forget for the time being all the Three Stooges document-fumbling surrounding the housing collapse. Set aside the obvious malfeasance of robosigning and rocket dockets.

The question on the table now is, were America's largest mortgage lenders stealing homes?

The recent lawsuit filed by Massachusetts Attorney General Martha Coakley against five of the nation's largest banks for deceptive foreclosure and loan modification practices essentially accuses them of doing exactly that.

Coakley accuses Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial of the following:

1. Engaging in unfair and deceptive foreclosure practices by conducting foreclosures when the defendants lacked the right to do so and misrepresenting to homeowners their roles as mortgagees or as the holders of the mortgages.

2. Engaging in false documentation practices to facilitate their foreclosure practices.

3. Deceiving homeowners in the course of servicing mortgage loans by misrepresenting to borrowers regarding its loan modification programs, acting deceptively in implementing loan modifications and deceiving borrowers regarding foreclosure proceedings.

"The layman's term for that is 'stealing homes,' says Firedoglake blogger David Dayen. "Coakley is accusing banks of stealing homes. They didn’t have the proper proof of ownership to take control of the homes in a foreclosure, and they did it anyway, by forging documents and committing fraud upon state courts."

Coakley's suit also includes the Mortgage Electronic Registration System, or MERS, the epicenter of its "false documentation practices" charge.

Massachusetts isn't the only state that has grown frustrated with the Obama administration's year-long attempt to negotiate a let's-move-forward settlement between the 50 states and the banks. Others, including California, Delaware, Nevada and New York, have distanced themselves from the talks, which appear headed toward an agreement that some AGs say amounts to a hand slap for the big banks.

But as the first to break from the pack, Coakley's suit reframes the debate from a snipe hunt for sundry robo-shenanigans by underlings to some serious charges leveled at top management.

The 50-state agreement under construction looks like it would grant the lenders immunity from prosecution in exchange for a settlement of $20 billion to $25 billion, to be used primarily for principal reduction and loan mods.

Coakley says she'll consider signing onto any forthcoming agreement based on its merits but has made clear she won't be party to any plan that includes broad liability release regarding MERS and other issues.

What's next? Will other states follow Coakley's lead?

Only time will tell.

But her bold break certainly throws into question the attraction of that (now) 49-state work-in-progress, and perhaps the wisdom of attempting to collectively bargain away a national disgrace.

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80 Comments
Tony Accetta
February 03, 2012 at 11:33 pm

Nobody is more willing and able to lead the charge against Wall Street mortgage origination and securitization crimes than I. However, suits such as this beg the question. Certainly those being foreclosed upon have defaulted. Certainly the financial institutions have an interest in those defaulted mortgages. They paid for them. To characterize their foreclosure practices as "stealing" is a bit over the top. Make no mistake: both Bush and Obama have given Wall Street a major pass. Not a single major individual or institution was indicted. No license was revoked, no franchise cancelled. Thanks to Holder and Obama, statutes of limitation now preclude most criminal and civil fraud action. The new Commission is a cynical and manipulative ploy to give the impression of action where there has been none, accountability where none can or will be imposed. It behooves the dissident Attorneys General to accurately describe the issues, and take such action as may remain available. False headlines about "stealing" do not advance that mission. Homeowners who have not paid their mortgages are not victims. The real victims are the housing markets and the US economy.

Janet
January 23, 2012 at 9:09 am

Americans hurting Americans...what has this world come to. Do you know that in some countries foreigners are not allowed to buy property there. What would that do to this country? The land of the free and the home of the brave. I am American born and very ashamed of how we treat each other. Money is definitely the root of all evil. I did get my loan modified after a grueling two year process. Nothing was done about the negative equity though. I boughy my home in 2006 for 296,000. Right now it is worth 230,000. What a great investment that was. Still not sure what to do. I feel this is a money pit. I did have to get behind on my payments before they would help me. It was a gamble. I also spent countless days and hours on the phone with the mortgage company. I had a first and a second I had to get modified. I am happy I got it accomplished but still feel robbed by the fact that I may will probably never reach the 296,000 that I paid for the house. I hope all those who continue to take advantage of troubled homeowners never have trouble themselves. I also hope they cannot sleep a wink at night.

Jay MacDonald
January 22, 2012 at 3:57 pm

Thanks for your comment, Oliver. Quick question: how were the banks forced to lend money to people who were not credit worthy? And who forced them?

Arleine Demien
January 22, 2012 at 12:33 pm

Banks, today, are/have been allowed to PRACTICE services that in past years would have been considered dishonest/illegal. Sister-in-law has never been late on a mortgage payment in past 10/11 years. When she requested her mortgage re-financed to a lower rate, one of the BIG BANKS who took over her smaller bank in IN, refuses(d) to allow her to do so. Seems there was one mark on a credit report (dishonest one), but even though she's never "missed/paid late" they insist on forcing her to pay "Higher-than-everyone-else-interest." Wonder how many others have had identical treatment? What a GREAT WAY for BIG BANKS to really BLEED Fellow Americans(?)....

All the BIG BANKS & BROKERAGES were "BAILED OUT" by the "Where's the Birth Certificate" president who used HIS STIMULUS bucks to put CHAINS around American's necks & he's still allowing a job to be done on us in every way he can. Still no work, no jobs, NO accounting to us of his 3-1/2 years-old campaign donations, STILL no budget. How about Barney Frank? He was involved in mortgages so huge (thought FHA was for 1st-time home purchasers) NOT million-dollar-loans that were NOT traceable to origin. Freddie Mac, Fannie, etc.,involved & still NOTHING done to resolve them to the American people. HOW much more should Americans tolerate from this admn? No wonder BARNEY & PELOSI want to retire. BUT FIRST of all they should be made to come clean on all they wee involved in & all loose ends handled. Everything in this admn. should be cleaned up. WE DON'T NEED ADDITIONAL MISHANDLING of AMERICA'S BUDGET, DON'T NEED A HIGHER DEBT CEILING. INSIST this admn. create a budget (as required by our law) & live within it, like everyone else. ALL ITEMS that have been NEGLECTED NEED TO BE MADE PROPER. THIS group has abused the laws of the land way too long.....

Cindy
January 22, 2012 at 12:19 pm

My sister and her husband had a mortgage with Wells Fargo but did not escrow taxes. She always paid her mortgage on time and had an excellent credit rating. Her husband left her and she had trouble paying her real estate taxes, which Wells Fargo paid on her behalf. They then turned around and billed her for the taxes. She asked if she could pay the taxes back to them on a monthly basis and they said no, they needed all up front or they would start foreclosure. She asked if she could modify her loan so that she could roll her taxes into her mortgage paymwent and catch up on the past due taxes. The told her they would not modify her loan because she was "not behind" on her mortgage payments. They suggested that the only way they would modify is that she get behind on her payments , which she unwillingly and purposely did. When she again tried to modify, they gave her the biggest runaround that I have ever seen. She would fax the same documentation to them every week, which somehow always "got lost" or "never received" even though she would present them with the fax confirmation sheets. This went on for months until she decided to sell the house. Oh, and I forgot to say that this was a $250,000.00 home and she owed only $65,000.00 her mortgage. Could this be why Wells Fargo wasn't willing to work with her on her modification. She was not underwater and she was not behind on payments initially. This country is in a sad state of affairs.

Donna
January 22, 2012 at 12:08 pm

Another bank to be added would be PNC Mortgage (acquired Nat'l City loands); which I wasn't given an option. My husband was diagnosed w/MS and his job sent him home (still at home with not status). I tried going through the Obama Modification plan and was denied. PNC then suggested I go through their modification plan; completed paper work, received a 3 month trial plan (a little under $200 off mortgage). PNC came back and said no to the modification, increased my mortgage (including legal fees), mortgage term was extended from the remaining 15 years to a new 40 year loan and finally my interest rate remained the same. I was told because I had equity in the house, I was denied a modification. Other people in my subdivision had equity and received a decreased interest rate, decreased loan amount and had/have equity in their homes. Their mortgates are at 30 years. PNC was very slow and always ask me to resend paperwork I had already provided. I'm locked into this mortgage for 2 years before I can refinance. The other option, sell which I would walk away with a lose.

Mary Robinett
January 22, 2012 at 11:49 am

Well the good news, this article and all the comments are completely true and it is refreshing to know that all these people know what is going on with the Wells Fargo and the other banks. The bad news is that all these articles tell the stories of what is really going on with Wells Fargo and the other banks.
This is the state of our country the United States, land of the rich, the criminal behaviors of Wells Fargo, other banks, credit card companies, Wall Street, Congress stealing money from the stock market with the illegal inside information that they vote on to manipulate the stock market, sells our home loans to communist countries without telling home owners(that is the money we are paying we should have to be notified), and giving our tax money back to all the criminals that created this complete divesting disaster.
I am currently working with Wells Fargo to refinance/modify our home loan because our family had a very extreme hardship. My husband was hit by an impaired driver on his way to work and his neck was broken. He couldn’t work for almost a year. The driver was a young woman who was up all night; she got away with this because the courts and insurance companies are just as broken and criminal as the banks…another story, another time. Anyway we got nothing from the car accident except for our diminished savings, our used up children’s college fund, and a huge second mortgage debt which causes our home to be upside down. When we were using our equity to live on because of my husband’s broken neck, our home was worth $550,000; now, our home is worth $250,000. We have nothing and will loose our home if the bank doesn’t give us a lower interest rate on our home loan and equity loan, so we can live within our means. Everything went up and we can no longer live on the money that we make. Please help the American middle class!

Jim
January 22, 2012 at 11:39 am

Chase should be at the top of the list and investigated in all 50 states. Even tho you have paid off 60% of your home loan and then you get into financial trouble and miss 2 payments they want the 2 payments at once. They wont work with you. They try and foreclose. I had to borrow from my parents to pay the 2 months. Then I asked them to refinance my loan and they would not.They said I have a bad credit score! Of course you guessed it the bad score was from Chase THEMSELFES!