1 in 3 Foreclosures Were Triggered by Bank Error

More than one-third of households pulled into foreclosure proceedings during the financial crisis were the victims of possible bank errors or illegal practices, according to data released by regulators yesterday. The Huffington Post reports: Close to 1.2 million borrowers, or about 30 percent of the more than 3.9 million households whose properties were foreclosed on by 11 leading financial institutions in 2009 and 2010, had to battle potentially wrongful efforts to seize their homes despite not having defaulted on their loans, being protected under a host of federal laws, or having been in good standing under bank-approved plans to either restructure their mortgages or temporarily delay required payments. More than 244,000 of those borrowers eventually lost their homes, government data show. The estimates, disclosed Tuesday, far exceed projections made over the past few years after document abuses known as robosigning gained widespread attention in late 2010. The Office of the Comptroller of the Currency also announced the terms of a settlement with the nation’s largest banks over foreclosure abuse. This week, the 13 banks involved will begin sending payments to borrowers potentially impacted by bank misdeeds between 2009 and 2010. But more than four million households will share a total pay-out of $3.6 million, leaving most with paltry sums. To highlight the inadequacy of the settlement, ex-Wall Street employee and Occupy Wall Street activist Alexis Goldstein created the site, “What You Can Buy For Having Your House Stolen.” A homeowner who was foreclosed upon even though the bank approved a loan modification, for example, will receive $500--enough to buy ten pitchforks.