The financial institutions that wrongfully foreclosed on people in the robosigning scandal have been ordered to pay those people back by the federal government. Those people which were foreclosed on without having deserved it could be compensated. Source for this article – 14 banks ordered to pay homeowners back for bad foreclosures by MoneyBlogNewz.
Largest financial institutions in the nation to pay the price of incompetence
Federal regulators recently reached a settlement with the financial institutions involved in the robosigning scandal, in which foreclosure proceedings were improperly started against property owners because financial institution officers could not be bothered to do their due diligence on the paperwork concerning the state of the homeowners’ personnel loans. Reuters states that the homeowners who were foreclosed upon wrongly will get money. The banks will pay them back. Total, there were 14 businesses. USA Today reports that they’re Ally Financial, Aurora Bank, EverBank, HSBC, Sovereign Bank, SunTrust Banks, MetLife Bank, OneWest Bank, PNC, U.S. Bank, Wells Fargo, Bank of America, JPMorgan Chase, Citigroup and Citibank. Loan servicing companies MERSCORP and Lender Processing Services have also been ordered t! o pay back improper foreclosures. Impacted homeowners will likely be contacted by these institutions in the near future to make arrangements.
Determining the total fallout in the future
The numbers of people that need to get paid or the fines that can be placed have not been added together yet. Some government officials have been recommending up to $20 billion in fines be levied against the financial institutions involved. Financial institutions have even more to worry about. This settlement really only has reached the Federal Reserve, the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Every state attorney general nevertheless has settlements pending along with federal agencies.
Costs of mortgages to increase
Banking and real estate insiders are insisting that the new legislation and increased regulatory scrutiny will increase the costs of lending a mortgage to a prospective homeowner. MarketWatch reports that loan officer commission could be dropped due to new Federal Reserve rules. Most institutions are no longer giving out commission based on rates of interest on the mortgages. That means lots of profit could be lost. The Center for Responsible Lending, a consumer advocacy group that has endorsed reform of financial products from mortgages to payday loans, insists that costs to consumers won’t go up, however decreasing revenues are typically passed to customers in the form of increased costs.
Citations
Reuters
reuters.com/article/2011/04/13/us-financial-regulation-foreclosures-idUSTRE73C3DV20110413?pageNumber=1
USA Today
usatoday.com/money/economy/housing/2011-04-13-wrong-foreclosures-repay.htm
MarketWatch
marketwatch.com/story/home-loan-brokers-face-new-limits-on-pay-2011-04-11
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