New data reveals mega-banks still illegally foreclosing on thousands. Get this: The housing settlement allows it
The absolute least Americans can hope for from a major government settlement with a large industry over well-documented crimes is that the industry wouldn’t, after signing the settlement, just continue to commit the same crimes day after day. After all, following the tobacco industry settlement, cigarette makers did manage to stop advertising to teenagers that their product had no medical side effects.
But new evidence reveals the nation’s largest banks have apparently continued to fabricate documents, rip off customers and illegally kick people out of their homes, even after inking a series of settlements over the same abuses. And the worst part of it all is that the main settlement over foreclosure fraud was so weakly written that it actually allows such criminal conduct to occur, at least up to a certain threshold. Potentially hundreds of thousands of homes could be effectively stolen by the big banks without any sanctions.
Before I get into the reasons why, let me step back. It is a sad fact of modern life and the foreclosure mess that I have to differentiate between the litany of settlements granted by the government to the big banks. In this instance, I’m talking about the National Mortgage Settlement, the $25 billion deal concluded a year ago between 49 state attorneys general, federal agencies like the Justice Department and the Department of Housing and Urban Development, and the five largest mortgage servicers: Bank of America, JPMorgan Chase, Wells Fargo, Citi and GMAC/Ally Bank. Under the settlement, banks pay a trifling amount in hard dollars to the states as well as foreclosure victims, and provide principal reductions and other loan modifications to struggling borrowers. They also agreed to comply with a broad set of servicing standards for the time period of the settlement, covering three years.