Civil Rights Groups: Lending Settlement Must Help Struggling Homeowners
Civil rights and consumer groups are pushing back on efforts to limit the relief that struggling homeowners could potentially get out of a settlement with banks engaging in abusive and illegal servicing practices that threaten millions of homes.
Currently, all 50 state attorneys general and federal regulators are conducting a large investigation into evidence that the nation’s largest banks and servicers are engaging in reckless, improper and illegal practices at every stage of the securitization, servicing, and foreclosure process.
However, the Office of the Comptroller of the Currency, the federal agency responsible for regulating large banks like JP Morgan Chase, is pushing to settle the investigation quickly and cheaply, despite the fact that the practices at issue put millions of families at risk of losing their homes needlessly, are devastating communities, and further depress the whole economy.
Americans for Financial Reform (AFR), coalition of more than 250 national and state organizations that includes The Leadership Conference on Civil and Human Rights, has been urging the state attorneys general to reach a settlement that effectively restructures struggling homeowners’ mortgages, reduces their balances so that they no longer owe more than their homes are worth, and allows families to pay their bills and stay in their homes.
“Restructuring unsustainable home loans is a win-win solution that will help families, help investors, boost the housing market, and create stimulus for the economy as a whole,” said AFR, in a February 17 statement. “Regulators have a tremendous opportunity, and responsibility, to make this work. But the OCC – with a temporary acting head at its helm – appears to be making this harder. The OCC must get out of the way of holding the big banks and servicers accountable.”
In an October 21 letter, AFR told the state attorneys general that they “have the opportunity to require servicers to make meaningful changes so that foreclosures will truly be the last …resort.”
The letter also states: “This complete disregard for the homeowner is characteristic of how servicers engage in loss mitigation. Servicers have strong financial incentives to push people into foreclosure, and avoid loan modifications. As a result, servicer non-compliance with HAMP is standard behavior and is well documented, and homeowners who qualify for loan modifications are routinely losing their homes to foreclosure.”