Illegal bank actions stemming from New York foreclosures are going to net the state a payout of $25 million. The money is the result of a $25 billion nationwide payout agreed upon by five major banks and attorneys general from 49 states, following widespread mortgage abuses and fraud that resulted in tens of thousands of illegal foreclosures across the country.
Our Great Neck foreclosure attorneys know this payout won't make up for the many families who have been affected by these deceptive practices.
News reports indicate that Bank of America, JPMorgan, Chase, Wells Fargo and Ally Financial will all pay $5.9 million each to the state. Citigroup will pay $1.25 million.
Essentially, the problem lies with the system the banks used to track mortgages. It's called the Mortgage Registration System - or MERS. It was created in the 1990s. The problem is that banks never kept up with paper documentation and ownership questions abound when it comes time to take foreclosure action. They used the MERS system to input data rather than obtaining court orders and going through the local clerk of courts.
While $25 million may sound significant, it really only amounts to about $2,000 for each person who was illegally foreclosed upon. That is barely enough to cover moving costs and a security deposit. It's also going to be spread out over a three-year period. In exchange for the settlement, the state has agreed to drop some of its legal claims against the named banks.
But many of those individuals who still have lawsuits pending against these financial institutions intend to continue to press forward with them.
This settlement also did not require any of the banks to admit wrongdoing. What that means for the future is that there is no guarantee these type of actions won't continue to occur.
In fact, there are some 70 million mortgage loans - including subprime loans - that are being tracked in the MERS system that have yet to be entered into the clerk of courts system. Plus, right now, there are an estimated 11 million people who still owe more on their homes than they are worth.
This was after housing prices plummeted by more than 30 percent since 2006, when large loans were often given to people who could never have afforded to repay them in the first place.
For homeowners, that means you need an aggressive attorney who is willing to fight for your best interests and who is familiar with these type of cases and the tactics regularly employed by banks to protect their bottom dollar.
President Barack Obama has announced the implementation of a high-level group of officials who will be charged with organizing and investigating the ongoing complaints regarding abusive and reckless home loans, and New York State Attorney General Eric Schneiderman has been chosen to help lead the group. But as bureaucracies go, it could take years to sort through each complaint.
If you are facing a foreclosure in Great Neck, you need someone who will work to get you effective and timely results.