Homeowners across the US were affected by foreclosure fraud in recent years. This foreclosure fraud may have involved faulty documents and/or procedures, which resulted in homeowners wrongfully losing their homes. Officials in numerous states are now investigating allegations of improper foreclosures against banks and, in some cases, other third parties. Meanwhile, homeowners have also filed foreclosure lawsuits, alleging banks used an unethical foreclosure process to force them out of their homes.
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- Providing inaccurate foreclosure documents
- Providing faulty chains of title
- Confusing information about how the borrower has defaulted
- Confusing information about how to fix the default
- Foreclosing in private rather than in public
- Failing to get proper signatures on foreclosure documents
- Failing to have foreclosure documents properly notarized
- Conflict of interest
- Failure to inform consumers of their legal rights
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.
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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