I have been remiss in not writing more about the Office of Comptroller of the Currency’s efforts to “review” foreclosures and check for various errors and wrongful actions. I simply don’t believe they will have much of an impact. Most of the reviews are being carried out by “independent” entities selected and paid for by the banks. And the OCC simply doesn’t have a track record for forceful regulation.
But Shahien Nasiripour has found at least one instance where the OCC appears to be getting the facts straight, uncovering an epidemic of wrongful military foreclosures that is more widespread than at first thought.
Ten leading US lenders may have unlawfully foreclosed on the mortgages of nearly 5,000 active-duty members of the US military in recent years, according to data released by a federal regulator.
JPMorgan Chase and Bank of America this year reached legal settlements in which they agreed to pay damages to nearly 200 service members who claimed that their homes had been improperly seized.
Data released last week by the Treasury’s Office of the Comptroller of the Currency, which regulates national banks, shows that 10 lenders – including BofA, but not JPMorgan, which was not part of the study – are reviewing nearly 5,000 foreclosures of homes belonging to service members and their families to see if they complied with the law.
This mostly involves violations of the Servicemembers Civil Relief Act, in particular the restriction on foreclosing on active duty military while they are overseas. The scandal has led to an extreme degree of restitution from the banks, which have been camo-washing their reputations by providing settlements of up to $117,000 per wrongful foreclosure. The banks know they are severely exposed by illegal foreclosures on members of the military. In fact, violations of the SCRA carry with it potential sentences of up to a year in prison.
If they can clean this up, the banks must believe, they can stop the headlong rush into investigating all the other wrongful foreclosures they perpetrated over the years. And they’ll have the feather in their cap of a restored public image with respect to the military, one of the few remaining admired institutions left in the country.
But the review of 5,000 cases, after OCC’s John Walsh and other government regulators have maintained for months that only a “small number” of illegal foreclosures occurred, should only increase the banks’ exposure. Housing advocates know that the problem likely extends even beyond that level. As Sherrod Brown says in the article, “I don’t know if big banks are foreclosing on military families out of carelessness or callousness, but neither is
More from Pat Garofalo.