Big banks are finding a way to benefit from what was supposed to be their punishment in the robo-signing scandal.
In Florida, they have spent 75 percent of $7.7 billion in settlement outlays approving short sales and forgiving home-equity loans, earning credit for debts they were unlikely to collect or sales that would have happened anyway, a monitor’s report released Thursday shows.
Only about 15 percent of the money has gone toward principal reductions or refinancings that would keep Floridians in their homes, the report states.
“This is providing very little actual relief to consumers,” St. Petersburg foreclosure attorney Matt Weidner said. “It’s not keeping people in Florida in their homes. It’s writing off phantom debt (banks) weren’t collecting anyway.”
Bank of America spokesman Rick Simon said the spending provided “meaningful relief to borrowers by eliminating debt.” More than 100,000 Floridians have been offered an average of $75,000 in debt forgiveness or other aid, and thousands of potential loan modifications are still being processed, according to the report based on bank data.
But consumer advocates and attorneys have criticized the relief as sidestepping the settlement’s goals. Since April, the report said, Floridians have filed nearly 600 complaints over modifications, customer service and other issues.