This is pretty rich. Bank of America CEO Brian Moynihan placed an op-ed in the Detroit News assuring the residents of that ravaged community that they’re always there to help.
One of the most important thing bankers can do to help drive economic recovery is to help financially distressed homeowners keep their homes when possible; and to help build a better, more stable mortgage industry for the future.
We are making progress. U.S. banks have completed about 4 million mortgage modifications since 2008 to help customers keep their homes. More than 750,000 of those are Bank of America’s [...]
Every day, our mortgage servicing employees talk with tens of thousands of distressed customers, with the goal of helping them stay in their homes, if possible. Unfortunately, the only path left for some is foreclosure — the worst outcome for the customer and the bank.
Foreclosure rates in Detroit have been among the highest in the nation for several years. The good news is that the number of foreclosures throughout Metro Detroit fell nearly 30 percent year over year in December, and close to 14 percent in January.
I don’t even know where to begin. First of all, foreclosures have fallen year over year because of companies like BofA having to halt foreclosure operations because of their own problems with robo-signing and foreclosure fraud. Second, the stats on modifications are just as misleading, and cannot be independently verified. Third, this notion that mortgage servicer operators are standing by with a helping hand is disputed by practically everyone who has dealt with them.
There’s no contrition in this statement from Moynihan, just a fusillade of lies about what really happens between servicers and their customers. The truth is that servicers have a financial interest in foreclosures over modifications, even though the investors holding the mortgages have the opposite financial interest. In this instance, the investors and the homeowners are on the same side, and the only barrier to fixing the housing market are the servicers and the big banks who own them.
Of course, Moynihan won’t accept any responsibility for the collapse of the housing market or his resistance to doing what’s necessary to heal it. But he may be compelled to soon. Not only is Dallas lawyer Talcott Franklin amassing a large enough clearinghouse of investors to meet the requirements to pursue put-backs of bad mortgage-backed securities on the banks, but there’s another threat in the form of shareholders:
Shareholders at Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC) could vote this spring to compel their audit committees to investigate the banks’ mortgage and foreclosure practices, and report back by fall.
The votes will come despite much eye-rolling from the banks, which have tended to be less than forthcoming on the subject. Bank of America and Citi petitioned regulators to keep shareholders from voting on the proposal, which is sponsored by the New York City pension funds led by city comptroller John C. Liu. But the Securities and Exchange Commission ruled this month that the votes must go on.
“An independent examination of bank foreclosure practices is needed to reassure shareholders and protect pensioners and taxpayers,” said Liu, a Democrat who has been pushing since last fall for bank boards to wake up and investigate. “Regrettably, the banks have failed us on this and even went so far as to try and kick us off the ballot, but the shareholders have prevailed.” [...]
BofA, for its part, argued it had “substantially implemented” the proposal by releasing a mishmash of foreclosure and mortgage information over recent months. But the NYC funds responded that “the fact that the company’s existing internal controls and reviews did not discover any irregularities with its foreclosure processes, until such irregularities became highly publicized in the press, highlight the need for an independent review of the company’s internal controls related to loan modifications, foreclosures and securitizations.”
You mean we may get an actual independent investigation of bank practices? Maybe. This is kind of a long-shot, but it could put more pressure on the boards to move toward a resolution.
As for the investigation we need, from state Attorneys General, a coalition of community activists will initiate a national call-in day on March 29 to the AGs, advocating for a strong settlement that holds the banks fully accountable. Details at the link.