WRONG
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and leave. Her son, who is autistic, was traumatized, she said.
Bank of America declined to comment on the case, it said, because
the lawsuit is pending.
I’ve heard some version of the
Davis story probably 100 times in
the past year from homeowners
who lost their home or are on the
brink of losing it because of what
they claim are mortgage company
errors. Some of these people made
foolish borrowing decisions. But
most are ordinary people who fell
behind on their payments after they
lost their job or got sick. They are
at their wits end — they cry themselves to sleep, fret over their financial future and some worry about
having to move into their car. And
they have reason to be afraid.
Large banks have proved so bad
at preventing foreclosures that
even Fannie Mae and Freddie Mac
don’t trust them to do it.
Over the past year, Fannie and
Freddie, which hire mortgage
companies to manage millions of
home loans that they own, have
paid Bank of America and others
$1.5 billion in kill fees to cancel
servicing contracts for 700,000
loans. The mortgage giants determined that by moving the handling of these loans to specialty
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companies with a track record of
communicating with struggling
borrowers, they could prevent
thousands of foreclosures, saving
between $1.7 billion and $2.7 billion over five years.
The mortgage companies have
borne the brunt of the blame for
the failures, but all this happened
under the watch of the Treasury
Department and regulators like
the Office of the Comptroller of
the Currency, which for years
failed to take meaningful actionagainst the biggest banks over
servicing practices.
“Servicers have been allowed to
run roughshod over homeowners,
with no consequences,” said Diane
Thompson, a foreclosure expert at
the National Consumer Law Center. “As a result, the foreclosure
crisis has been greatly worsened,
with devastating consequences for
individual homeowners, communities and our national economy.”
As part of a $25 billion legal
settlement with the federal government and states, five large
banks — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup
and Ally Financial — agreed earlier this year to implement wideranging reform of their servicing
practices or face stiff fines of up to