Wrongful foreclosure practices by banks can cause great harm to consumers. Such practices can even lead to wrongful foreclosures, which can have many negative impacts on homeowners.
Many reports have arisen in recent months regarding questionable foreclosure practices by banks. This gives rise to a question: what actions will the government take in response to these alleged questionable foreclosure practices?
In April, federal bank regulators did take actions in response to these alleged practices, including ordering several of the nation’s banks to develop and submit plans to fix problems with their foreclosure practices. The regulators set a mid-June deadline for banks to comply with this order.
However, the regulators have now extended this deadline out by 30 days.
Why did the regulators give the banks this extension? It appears that this extension was given in part due to settlement negotiations that are going on between other government entities (including federal agencies and states) and several banks regarding mortgage and foreclosure abuses. The hope was that a settlement agreement would be reached in these negotiations prior to the original deadline’s arrival.
However, such a settlement agreement has not yet been achieved. Thus, the deadline extension gives these negotiations another chance to reach a settlement prior to banks being required to comply with the federal regulators’ above-mentioned order.
Why would the government want a settlement to be reached in these negotiations before banks are required to comply with the federal regulators’ order? Reportedly, one reason is to avoid the possibility of two separate standards developing regarding how banks are to deal with individuals who fall behind on their mortgages.
Thus, it will be interesting to see whether such a settlement is reached before the new deadline. It will also be interesting to see what the above-mentioned banks are ultimately required to do in regards to fixing their foreclosure practices and compensating individuals who were allegedly hurt by these practices.
Source: The Wall Street Journal, “Banks Get 30 More Days to Fix Foreclosure Practices,” Alan Zibel and Nick Timiraos, 13 Jun 2011