During the recession, millions of homeowners turned to their banks to find a way to keep their homes. One way those affected found as a means of avoiding home foreclosure was to seek a loan modification through the existing mortgage lender. Loan modifications were successfully achieved by some Florida homeowners, while others lost their homes anyways. One bank was recently accused by the Consumer Financial Protection Bureau of essentially causing thousands to suffer though home foreclosure unnecessarily.
Flagstar Bank is said to have stalled loan modification applications, and these delays in processing the applications led to thousands of foreclosures. Apparently, roughly 25 bank employees were responsible for dealing with 13,000 loan modification applications. The bank also stands accused of not letting homeowners know their applications were incomplete.
Allegedly, the bank miscalculated the income of the borrower, leading to denials for loan modifications. The bank is also accused of not giving borrowers the information needed to appeal a loan denial. Because of these accusations and others, the CFPB fined Flagstar $10, and the bank will also pay more than $25 million to thousands of victims. While Flagstar has agreed to pay the government penalty, it has not formally admitted the accusations made against it.
The loan modification process can be complicated and difficult for homeowners to complete. For anyone in Florida facing the possibility of home foreclosure, a careful professional analysis of one’s financial position and the available options may be the best first step for struggling homeowners. This may help in forming a strategy that will allow them to move forward in their own best interests.
Source: money.cnn.com, “Bank’s ‘repeated failures’ led to 2,000 foreclosures, feds say“, Gregory Wallace, Sept. 29, 2014