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Foreclosure Review Finds Potentially Widespread Errors


forecloNearly a third of all foreclosed borrowers who faced proceedings brought by the biggest U.S. mortgage companies during the height of the housing crisis came to the brink of losing their homes due to potential bank errors or under now-banned practices, regulators have revealed.

Close to 1.2 million borrowers, or about 30 percent of the more than 3.9 million households whose properties were foreclosed on by 11 leading financial institutions in 2009 and 2010, had to battle potentially wrongful efforts to seize their homes despite not having defaulted on their loans, being protected under a host of federal laws, or having been in good standing under bank-approved plans to either restructure their mortgages or temporarily delay required payments.

More than 244,000 of those borrowers eventually lost their homes, government data show.

The estimates, disclosed Tuesday, far exceed projections made over the past few years after document abuses known as robosigning gained widespread attention in late 2010.

They are likely to further calls in Congress to either strengthen protections for borrowers or increase disclosures by the Federal Reserve and Office of the Comptroller of the Currency, both bank regulators. The regulators made public the latest figures as part of a previously announced multi-billion dollar settlement to resolve allegations of wrongdoing.

They reveal that nearly 700 borrowers who faced foreclosure proceedings had actually never defaulted on their loans.

More than 28,000 households that faced foreclosure proceedings were protected under federal bankruptcy laws, while roughly 1,100 had been meeting all the requirements of so-called forbearance plans that their mortgage companies had agreed to, which allow for delayed payments.

Some 1,600 borrowers who faced foreclosure proceedings were protected by the Servicemembers Civil Relief Act of 2003, which forces mortgage companies to cap interest rates and follow special procedures when foreclosing on homes belonging to active-duty members of the armed forces and their families.

READ MORE: HUFFPOST



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