The crash of the housing market affected millions of Americans nationwide, including a large portion of homeowners here in Texas as well. During this time, foreclosures and short sales ran rampant, with many property owners confused as to whether banks had pulled a fast one on them or not. As some of our readers may remember, it was decided that banks were pulling a fast one over on their customers, which eventually led to the mortgage settlement that helped iron out problems inherent in the system.
But now, some state prosecutors are complaining that not all of the banks are complying with the settlement agreement, some of which are considered to be the nation's largest. If these accusations turn out to be true, these banks could face serious litigation from the government in the upcoming months.
The $25 billion national mortgage settlement came with several stipulations that banks were supposed to adhere to. Failing to abide by the terms of the agreement would mean severe legal consequences including hefty fines of up to $5 million. One of the most common violations that state prosecutors say they are hearing about is in regards to the documentation homeowners are required to present when remodifying their home loans. According to many homeowners, banks are not telling them whether they have missing documents, this putting these homeowners at an increased risk of going into foreclosure.
"It is time for [the banks] to live up to their end of the deal," explained Shaun Donovan, secretary of the Department of Housing and Urban Development, in a recent interview with reporters. According to this interview, the government is prepared to take legal action against the banks accused of violating the settlement agreement in the event that they do not comply with the terms established by the government. Donovan says that if the problems seen now reoccurs within six months, the government will be forced to take legal action.
Source: The Washington Post, "Big banks are violating national mortgage settlement, report says," Danielle Douglas, June 19, 2013