Millions of foreclosure abuse victims to get checks

(CBS News) LOS ANGELES - Since the real estate implosion five years ago, major banks have been accused of fraudulent tactics to foreclose on thousands of Americans.

On Monday, the U.S. government reached a settlement with 10 banks who will pay $8.5 billion. About four million homeowners who lost their homes to foreclosure will be getting some compensation.

About 200 people showed up to a workshop in south Los Angeles last month trying to figure out if their banks improperly foreclosed on their homes. Now many of them will be getting a check.

10 banks agree to pay $8.5B for foreclosure abuse
Consumer advocates question $8.5B foreclosure deal

The 10 banks -- including Citi, JPMorgan Chase, Bank of America, and Wells Fargo -- will make $3.3 billion in direct payments to customers who were in foreclosure during 2009 and 2010.

Homeowners charged improper fees could be paid a couple hundred dollars. About $125,000 would go to homeowners who were foreclosed on even though they were up to date in their mortgage payments.

The settlement replaces an existing independent foreclosure review program that began in 2011 after it was discovered many banks approved foreclosure without actually reviewing the cases, sometimes hundreds a day.

Tunua Thrash

/ CBS News

Tunua Thrash helps homeowners in Los Angeles navigate foreclosure. She worries the bank payouts won't go far enough.

"Certainly the fact that there have been many mistakes, and some homeowners have lost equity that could exceed that amount, is letting the banks off easy...as far making sure that homeowners are made whole," Thrash said.

The banks will also spend $5.2 billion on loan modifications and principal reductions for current homeowners. That may help James Bruce, who could lose his south L.A. home at the end of the month unless Citibank modifies his adjustable rate mortgage, which he can no longer afford.

"It started adjusting on me and it just got overbearing and I couldn't take it, so it just ate up all my savings and everything that I could muster up to pay that mortgage for over a year," Bruce said.

About 3.8 million people will be getting some payment from these 10 banks. Even homeowners whose foreclosures were processed properly will get something because the banks have decided it's simply easier to write a check than try to figure out who was actually harmed.

[cabaraoke]

The true victims of this are getting ripped off royally in this deal. Because of the cost of going through their records to learn who were victims, and who were not, the banks are just going to pay a little to everyone. So, those who were abused by the system are being treated equal to those who abused the system, like the rich who could afford to pay the mortgage, and simply walked away from a home they could not get sold. They also will get a piece of the action.

[Frustrated0819]

I believe that I am a victim of this practice and I dont know where to go for help. The Bank is giving me the run around everytime I call and I'm not getting any answers. They always tell me that they are going to call back. However, they never do... They've been lying to me and I can prove it. I don't what else to do. Does anyone have any information? I need help ASAP... Thanks!!!

[cbs_bull]

1> Home owners should be responsible to their risk taking decisions. Those who bought houses that they can't afford should lose them.

2> We have seen a few billions dollar settlements for the trillions dollar crime. With countless bank executives got away with millions when they cashed out from the mortgage scam. And more importantly, why no perpetrators have been prosecuted or sent to jail?

[kbbpll]

I'm a victim of my own stupidity! Pay me!

[alphaa10000]

Many would accept your self-diagnosis. Obviously, you never have faced foreclosure, or you would understand a great deal more.

[alphaa10000]

ATTENTION SCOTT PELLEY

The story about the DOJ settlement is an unfortunate exception to the general quality of most stories-- the story text does not provide meaningful context for the $8.5 billion settlement.

Like many network reporters, Ben Tracy probably had too many competing demands on his time to provide a fuller text version, but it would have been helpful to know--

1. What percentage does the four million homeowners in the DOJ settlement represent of the total foreclosures since 2007?

2. Since 2007, how many American foreclosure victims have lost their homes?

3. Since 2007, how many American homes were foreclosed when their accounts were in order, while still making payments on time?

4. Since 2007, how many fully paid-for American homes were foreclosed by banks?

5. How many plaintiffs are included in the DOJ settlement?

6. What percentage of all foreclosure abuse plaintiffs since 2007 does the DOJ settlement represent?

[johnnyaction]

Abused? Please. They thought they were screwing the system by taking out loans they KNEW they couldn't afford.

Caveat Emptor... dawg. It iz wut it iz y0.

[greennnnnn-2009]

Um, they illegally foreclosed on people whose payments were on time also. What about those people? Just pull the house right out from under them when they've paid the way they're supposed to? Everything in existence is what it is. What an inane saying.

[blakemcdaniel]

Tell me again how these folks were abused? They took out a loan they couldn't afford. They defaulted. Don't blame the lender. This entitlement/victim perspective is disgusting.

[alphaa10000]

NO PROTECTION FROM THE DEPARTMENT OF JUSTICE

CBS reports, "On Monday, the U.S. government reached a settlement with 10 banks who will pay $8.5 billion. About four million homeowners who lost their homes to foreclosure will be getting some compensation."
---

This is not one of DOJ's finest moments. As an LA-based advisor to the foreclosed comments, there is every reason to doubt the settlement will even approach an adequate figure to make four million families whole.

The sum of $8.5 billion is a composite of cash payments and mortgage adjustments. Were it $8.5 in cash, only, it still would provide an average of only $2,125 to each account-- an average, yes, but also a joke when some foreclosure victims already have lost their homes.

As any banker who reviews this DOJ settlement will realize, to fine 10 major mortgage banks $8.5 billion is a slap on the wrist. The settlement is scant disincentive to future crime by the same banks.

This CBS story also is written without much context. For example, what percentage does the four million represent of the total foreclosures since 2007? How many foreclosure victims lost their homes? How many were foreclosed when their accounts were in order, while still making payments on time? How many paid-for homes were foreclosed by banks too greedy to pay attention to deed records?

[shurch4truth]

Let us not forget what the far right republicans are so quick to say "capitalism makes the world go round". I

[Ulgnud]

For those whose homes were paid off and those who were foreclosed on whose payments were on time I have a better solution. The bank should hand them the keys to a like kind home in good repair and pay whatever taxes they would be assessed as the revenuers would look on it as a gift. This would compensate them for the stolen house and compensate them for the hassle they were put through. I have no problem with homes being foreclosed on those who are in arrears with their payments.

[alphaa10000]

You suggest one solution of many, since the idea of being "made whole" is a commonly recognized objective of a lawsuit.

As for foreclosure when payments are behind, that involves too many helpless American families in a variety of situations beyond their control to merit a glib comment like, "I have no problem with that".

You should have a problem with banks-- who profited enormously from free money at the Fed, and the Bush/Paulson bailout-- foreclosing without an attempt at negotiation with many of the same taxpayers who bailed them out.

In early 2009, Americans were ready to hang bankers on the nearest statute, and banks themselves feared liquidation and even nationalization.

But as it turned out, the Obama administration treated banks with kid gloves and deference never given to foreclosure victims. It was a full two years before an Obama foreclosure relief agency-- already funded by congress-- began operations. This suggests Obama has not been actively involved, to say the least.