Deceptive Practices in Foreclosures

September 17, 2013
New York Times 
mortgage lending news

This New York Times editorial notes that in early 2012, "when five big banks settled with state and federal officials over widespread foreclosure abuses, flagrant violations — including the seizure of homes without due process — were supposed to end." However, abuses keep coming to light. Nearly three million homeowners are in or near foreclosure, and many continue to be victimized by improper and possibly illegal practices. The editorial says that under the foreclosure settlement, "banks are responsible for vetting, supervising and auditing contractors, a category that clearly includes property management companies. Profit and expediency, however, seem to have trumped due process yet again.

Property companies and their subcontractors make more money on vacant homes than on occupied ones, because abandoned property requires more work … and banks get some or all of the proceeds from the sale of vacant homes." The editorial concludes that "the failure of federal policy to ensure adequate mortgage relief to borrowers, even as the banks were bailed out, remains an injustice and a drag on the economy. Foreclosure abuses add inexcusable insult to injury."

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