Local Law Firms Home > Bankruptcy & Foreclosure News > Banks Settle Foreclosure Fraud Cases
According to reports from various sources, the five banks—Wells Fargo, Citigroup, Chase, Bank of America and Ally Financial settled on a multitude of lawsuits from both state and federal government. The cases involved a broad amount of violations, such as the use of "robo-signing" to hurry the foreclosure procedure in usually fraudulent ways.
Eric Schneiderman, New York Attorney General will continue with his lawsuit against three of the banks for fraudulent and unlawful actions in MERS, also known as the Mortgage Electronic Registration System database. This database is the main source of data for every mortgage in the country; in recent years, almost all home loans in the United States were registered with MERS instead of county offices, saving lenders and debtors millions of dollars in extra costs but depriving local governments of important revenue.
The $26 billion represents a major foreclosure case settlement, but it apparently won't affect the financial institutions too much. Collectively, four of the banks mentioned above took in an overall profit of $47.6 billion just last year alone. It's not as if the banks will be compensating for the cases out of complete profits, either; they've all set aside a reasonable amount of capital to compensate for their errors. Still it's telling that the financial institutions will be compensating just about half of their yearly revenue to walk away from the foreclosure obstacles.
In the meantime, secretary of the Housing and Urban Development, Shaun Donovan, has stated that the real estate market in the country remains depressed due to the fact that $700 billion in negative equity is held by property owners in the United States. To be completely clear – that equates to homeowners owning $700 billion, mostly to the financial institutions listed above, over and beyond the market value of their home.
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