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Banks Ordered to Reimbursh Wrongly Foreclosed Homeowners

By Tavis J. Hampton | April 15, 2011

The U.S. federal government has ordered 16 of the largest lending institutions to pay back those customers who did not get proper foreclosures.  Among those on the list are Citibank, JPMorgan Chase, Bank of America, and Wells Fargo, the four largest banks in America.

banks reimburse foreclosures

This is the governments latest jab at mortgage lenders designed to bring about retribution for their past sins, but like the others, it is by no means a knockout punch.  The joint report issued by the Federal Reserve, Office of the Comptroller of the Currency, and Office of Thrift Supervision, indicated that the three regulators would review the foreclosure audits and would levy fines in the future.

The lenders have 45 days to hire an auditor and reimburse the borrowers for any errors or other missteps during the foreclosure process.  The report did not specify a minimum or maximum amount to be reimbursed.

As with many of the other perceived wrist slaps on financial institutions, House Democrats were not at all impressed with the "lenient" order, and they would prefer lenders be forced to go through more steps before they can even start the foreclosure process.  Their new legislation will address that concern.

Since 2007, lenders have foreclosed on approximately 5 million homes, and lenders like Ally Financial (formerly GMAC) said they did not find any customers going through foreclosure who were not in “serious default” of their loans.  To that end, this latest order may be little more than a small bandage on a very large wound in the housing market.

  • One comment on “Banks Ordered to Reimbursh Wrongly Foreclosed Homeowners”

    1. Wells Fargo not only did robo-signing but also I have proof that Wells Fargo committed mortgage fraud and defrauded homeowners and wrongfully foreclosed home based on its fraudulent mortgage loan.

      Here is my story:

      Wells Fargo originated us a fraudulent mortgage loan in 2005.
      Wells Fargo’s fraudulent appraisal valued our home for $718,000.
      Wells Fargo’s review appraisal valued our home for $475,000.
      Wells Fargo promised to rescind its fraudulent mortgage loan and help us to recover all of our financial losses, if we prove that Wells Fargo made us a fraudulent mortgage loan based on inflated appraisal in 2006.
      Nevada Attorney General's Office suspended the appraiser's license for committing appraisal fraud on our home in 2008.
      Wells Fargo later on refused to carry out its promise to rescind its fraudulent mortgage loan. NRS205.372 states that committing mortgage fraud is a Category C felony, if proven, it also entitles us to rescind Wells Fargo's fraudulent loan.
      We put $151,000 downpayment. Between 2005 and 2009 we paid Wells Fargo around $350,000.
      On June 15, 2010, Wells Fargo still foreclosed our home, knowing that it is a Category C felony to make a mortgage loan and foreclose our home based on a fraudulent appraisal.
      Now, after it committed loan origination fraud and wrongful foreclosure, Wells Fargo is falsifying IRS 1099-A forms to write off its fraudulent mortgage loan which it has already sold to a pool of investors.
      You can find all facts on our website.

      Wells Fargo has repeatedly demonstrated to us that it has built up a business model based on fraud. Will Wells Fargo do the right thing by admitting its fraud and compensating us for our financial losses this time?

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