The Daily Dupe: How the big banks made $25 billion off the backs of homeowners
Welcome to “The Daily Dupe,” a spotlight on the big bank’s spin machine.
On the heels of a successful National Call-in Day, new reports show that the big banks’ own stock holders are turning against them.
Bank of America stock holders are suing the board and some officers claiming losses due to the bank’s faulty mortgage recording and foreclosure paperwork.
Bank of America “did not properly record many of its mortgages when originated or acquired, which severely complicated the foreclosure process when it became necessary,” according to the complaint filed today in New York state Supreme Court in Manhattan. The bank also concealed that it didn’t have adequate personnel to process the large numbers of foreclosed loans in its portfolio, the shareholders said.
All of this on top of recent news that shows how much the country’s top financial firms have pocketed in recent years by mishandling distressed homeowners’ loan paperwork, according to the newly created Consumer Protection Financial Bureau.
How much, you wonder?
In case after case, banks have repossessed homes while homeowners were waiting for decisions on loan modifications. They’ve foreclosed on people who never missed payments or whose houses were paid off. They’ve advised homeowners to default on payments to qualify for loan modification – only to deny their applications and then take their homes. And they’ve foreclosed on homes to which they have no legal right.
Of course, the damage goes much deeper – and the real price tag is much higher. The massive foreclosures have decimated entire communities, driving down property values and eroding local tax bases.
We’re all paying, except for the big banks. They’ve got $25 billion to divvy up, just from refusing to properly handle loan modifications. (And some are saying that $25 billion is still too low of an estimate.)
Bank of America and Wells Fargo came in as the top winners, saving about $6 billion each since 2007, followed by JP Morgan Chase, Citigroup, and Ally Financial. (Wasn’t it just the other day that a Bank of America rep said, of the bank’s zero-federal-income-tax year, “Bank of America takes its role as a corporate citizen very seriously?”)
When bad practices yield savings like these, the big banks need to face real penalties—not just a slap on the wrist. They also need to be forced to be part of the solution, including allowing homeowners to refinance their homes at current value.
Many thanks to the thousands of people across the country who called their state Attorneys General both yesterday and today to tell them to come out in support of a strong settlement that provides justice to millions of homeowners and that holds the big banks accountable for their crimes. For more info on what a final settlement should look like, read The Homeowner’s Bottom Line.