Property owners which were wrongfully foreclosed on by financial institutions in the robosigning scandal will be paid back, as 14 large mortgage lenders have been ordered to pay these individuals back by the government. The exact number of people who were improperly foreclosed on is not known. However, they will certainly be repaid for the suffering they endured at the hands of the errant banks.
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 bank officers could not be bothered to do their due diligence on the paperwork concerning the state of the homeowners’ personal loans. Part of the settlement agreement, according to Reuters, is that any property owners who were wrongly foreclosed on have to be repaid by the bank that did it. Total, there were 14 corporations. USA Today states that they are 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 corporations MERSCORP and Lender Processing Services have also been required! to pay back improper foreclosures. Soon, impacted homeowners will be contacted. Arrangements can then be made.
Not sure what total fallout will end up at
The numbers of individuals that need to get paid or the fines that could be placed have not been added together yet. Government officials like the idea of giving a $20 billion fine to the banks. Banks 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. Other federal agency settlements still need to be made. The state lawyer generals are also waiting.
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. New Federal Reserve rules on mortgage officer compensation, according to MarketWatch, may cut into commissions for loan officers. Mortgage brokers and loan officers at lending institutions can’t receive a commission depending on the interest rate at which a mortgage is lent at any longer, which analysts predict will eat into profits. The customers are the ones that will end up hurt by the legislation and paying more. The Center for Responsible Lending is a customer advocacy group that pointed this out.
Articles cited
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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