14 Lenders Ordered To Reimburse Homeowners
RENEE MONTAGNE, host:
The country's biggest banks are being told to make their foreclosure programs more fair to homeowners. Lenders, including Bank of America, Wells Fargo and JPMorgan Chase, will have to change how they work with homeowners before they can foreclose on a property. NPR's Chris Arnold has more.
CHRIS ARNOLD: Consumer groups have for years now been very upset with the banks. They say that the banks are improperly foreclosing on thousands of homeowners who really should qualify to keep their homes under President Obama's Foreclosure Prevention Plan. Now the Federal Reserve and other regulators are demanding that the banks reform the steps that they have to take before they can foreclose.
John Walsh is the acting comptroller of the currency.
Mr. JOHN WALSH (Acting Comptroller of the Currency): So they are under a level of scrutiny and so, you know, the proof will be in the pudding.
ARNOLD: But some consumer advocates are skeptical.
Mr. JOHN TAYLOR (National Community Reinvestment Coalition): It lacks much of the detail that talks about how these things would play out.
ARNOLD: John Taylor heads up the National Community Reinvestment Coalition. He says that some of the new regulations could be really quite helpful. For example, the apparent requirement that a bank give a homeowner a single point of contact to the bank. Right now he says it's a call center runaround.
Mr. TAYLOR: You're dealing with one person one day and the next day it's a different person and then two days after that it's somebody else, and nobody seems to know about the previous conversations so they're starting over. Then as they're making progress over the course of several weeks, even a month, all of a sudden all that gets lost and there's yet another person they're contacting who's starting over again. And then all of that's going on and finally they get a foreclosure notice.
ARNOLD: But the question is, will that change? At least some of the language in the new regulations seems to leave a lot of the oversight and even the penalties up to the banks themselves.
Mr. MIKE CALHOUN (Center for Responsible Lending): Letting the wrongdoer decide what the punishment is.
ARNOLD: Mike Calhoun heads up the nonprofit Center for Responsible Lending. He says that the banks for several years now have told regulators again and again that they're going to do a better job avoiding foreclosures. But...
Mr. CALHOUN: This is a lot like Charlie Brown and Lucy and the football. Each time the banks say they're going to do better but it's the homeowners who are left flat on the ground, and it looks like that's what's going to happen again.
ARNOLD: Calhoun hopes that a settlement coming out of an investigation by state prosecutors will have some stronger oversight.
Some of the banks are coming out with statements. For example, JPMorgan Chase says complying will require very significant changes to its mortgage business.
Chris Arnold, NPR News, Boston.
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