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During difficult economic times, some homeowners have difficulty making payments on their mortgage. The majority of these people are hard-working, honest people, who expect that if they are subject to foreclosure on their property, the company doing the foreclosing will also be honest and ethical and ensure the homeowners' rights are protected. Allegations have been raised against various banks and trustees that foreclosure laws have been broken and illegal procedures used to hasten the foreclosure process and push more people into foreclosure than should have been.
Some states require a judicial review of foreclosures, which means that a court filing must be completed before the foreclosure goes through. Some states, however, do not require a judicial review. Instead, foreclosure is done via public auction, which is overseen by a trustee. That trustee is supposed to act as a neutral third party in handling foreclosures. In both situations, allegations have been raised that companies (including banks and trustees) have used illegal means to foreclose on properties, forcing people out of their homes.
Among allegations about illegal bank foreclosures are that many companies involved in foreclosure are guilty of:
According to the Servicemembers' Civil Relief Act (SCRA), even in states that do not require judicial review of a foreclosure, a judge is required to authorize foreclosures on homes of military members. That authorization can only be given after a hearing at which military members are properly represented. The SCRA is in place to protect active military members, some of who might be on lock down and unable to communicate with outsiders or make mortgage payments. In some cases, service members have allegedly returned from active duty with no knowledge or warning that their home was foreclosed on.
Lawsuits have been filed against a variety of banks including JPMorgan Chase, Deutsche Bank and CitiMortgage, alleging the financial firms illegally foreclosed on the homes of active service members by not obtaining a court approval of the foreclosure. In 2011, JPMorgan Chase was ordered to pay $56 million to troops and told to change its procedures regarding its treatment of military personnel.
Foreclosure lawsuits have been filed in multiple states, alleging banks and third parties acted illegally when foreclosing on homes. In 2010, Bank of America suspended foreclosures across the US after officials alleged many foreclosures were based on faulty documents and potentially illegal procedures.
Illegal Foreclosure Lawsuit
In response to complaints about illegal foreclosures, Nevada has become the first state to make illegal foreclosure a felony. Bankers involved in illegal foreclosure may be sent to jail and face fines if they are found guilty of fraud.
In 2010, a California woman became the first person in that state to win her home back from a lender after it was foreclosed. The 73-year-old filed a lawsuit against Washington Mutual alleging wrongful foreclosure. The homeowner alleged that after she asked her lender to lower her monthly payments, she was told she would be sent a loan modification package. Instead, a real estate broker was sent to tell her the home had been foreclosed. A judge ruled in favor of the homeowner, finding that Washington Mutual acted improperly in foreclosing on the home.
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Last updated on Jan-20-12
FORECLOSURE ARTICLES AND INTERVIEWS
Did JPMorgan Chase Have Anything to Do with Your Foreclosure Case?
Newport Beach, CA: The US home foreclosure crisis and the practice of bundling mortgage debt into securitized bonds seems to be a never-ending source of problems. Now, a consumer fraud class-action suit, filed in US District Court, claims that JPMorgan Chase routinely uses fake documents to misrepresent itself as having standing in bankruptcy cases. Rather than bare the cost of proving the chain of ownership, Chase simply manufactures documents. "We've been able to track the JPMorgan cases from Santa Barbara, down to Orange County, Riverside and Los Angeles," says attorney Joe Roberts, "and you see the same nonsense documents being filed, and you see the judges biting on it, and you see the attorneys lying down and letting JPMorgan assert itself. [READ MORE]
Major Banks Hit by New Round of Foreclosure Lawsuits
Boston, MA: State officials from Massachusetts have targeted the nation's five largest mortgage servicers with foreclosure lawsuits for allegedly pursuing illegal practices and misleading troubled borrowers, according to the Los Angeles Times [READ MORE]
Attorney Chases Justice in Foreclosure Crisis
Philadelphia, PA: Got to hand it to attorney John Narkin. He's got this foreclosure crisis thing figured out—well, near as anyone can figure it out. The 113-page class-action suit on behalf of distressed homeowners filed by Narkin's firm, BHN Law in Philly, lays out the whole sorry story in amazing detail, complete with links to video clips [READ MORE]
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