Big Banks Under Fire for Foreclosure Methods. Face Regulatory Changes.

Posted on March 5, 2011

It appears that the Administration has retreated from efforts to go after individuals involved in the fiscal meltdown on Wall Street.  Bank and Brokerage managers that lost billions for investors have not been indicted.  We can hope that there are on-going investigations about which we know nothing that will in future give us some comfort that fiscal crime does not pay.  Bernie Madoff is just the tip of the iceberg.

That said, action for further accountability by financial institutions involved in mortgages has been taken at the state level.

State attorneys general have presented the nation’s five biggest banks with a list of demands that could drastically alter the foreclosure process and give the government sweeping authority over how mortgage servicers deal with millions of Americans in danger of losing their homes.

Under the blueprint, banks would be prohibited from starting foreclosure proceedings while a borrower was actively trying to lower the interest rate or ease other terms of the home loan, a process known as a mortgage modification.

Any borrower who successfully made three payments in a trial modification would be given a permanent modification. When a modification was denied, it would be automatically reviewed by an ombudsman or independent review panel.

The proposed changes, which will be discussed by the attorneys general when they meet in Washington early next week, would compel the banks to treat each borrower in default individually. [MSNBC]

Meanwhile, Bank of America’s new Chief Executive Brian Moynihan  is preparing for  the company’s investor day, the first since 2007.

Moynihan must lay out a clear plan for how a bank that has traditionally grown by buying rivals can now grow on its own, adapt to new regulations and return to consistent profits, investors and analysts said. [MSNBC]


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