It's well-known - and well-documented - that the greed of bank executives was a driving force of the current economic crisis, primarily stemming from the implosion of the housing market.
But now, a new study shows that banks' failure to act efficiently in the wake of the housing bubble burst actually led to about 800,000 families unnecessarily losing their homes.
What's more, Los Angeles Foreclosure Attorney Vincent Howard knows that inefficiencies continue to lead to unnecessary foreclosures, particularly when homeowners don't have the assistance of an experienced lawyer. With our help, you won't have to be one of them.
The recent study was a cooperative effort on behalf of the Federal Reserve Bank of Chicago, the federal Office of the Comptroller of the Currency, Columbia Business School, the University of Chicago and The Ohio State University. Researchers wanted to know how banks' understaffing, lack of training and disorganization affected our economic recovery.
As it turns out, the impact was major. The Obama administration had enacted HAMP, or the Home Affordable Modification Program, in an effort to compel banks to work with underwater homeowners in establishing loan modifications that would allow people to keep their homes. The goal, as announced back in 2009, was to help about 3 million to 4 million homeowners.
However, as it was later revealed, that was rather ambitious.
Even if banks had been performing at capacity, we could only have expected that about 2 million homeowners would have received modifications on the timeline outline. However, due to the inefficiencies of a handful of financial institutions, that number is actually closer to 1.2 million.
This failure is especially frustrating considering that the government paid subsidies to these banks in order to help them facilitate a maximum number of loan modifications. And yet, they still failed to properly staff their loan modification services or adequately train those employees who were supposed to be carrying them out. Given that foreclosures are time-sensitive, this slowing of the process meant that even homeowners who were trying to get a loan modification couldn't get one in time to save their home.
We also know that some of the biggest banks (Bank of America, Wells Fargo, to name a couple) were reportedly some of the worst in this regard. A failure on their part had a far larger impact than it might have for a smaller lending institution.
Researchers said they can't be exactly sure why these banks failed, though the speculate it had to do with the fact that these were institutions that were founded on processing and collecting payments. To have to suddenly switch gears to actively renegotiating loans altered their entire focus.
Former employees at these banks have been quoted by various media outlets as saying the whole process was "chaos."
But sometimes, those deficiencies almost seemed purposeful. As one former employee described, his office was unable to receive faxes relating to mortgage loan modifications because the fax machine was broken. It was weeks before the company responded to a request to replace it. This is a corporation with billions of dollars at its disposal - and yet, it couldn't be bothered to replace a fax machine used for facilitating perhaps hundreds of loan modifications.
Given the track record of these institutions, it's no surprise that they have been uncooperative, and increased government scrutiny still hasn't really helped the process. That's why you need a foreclosure defense attorney with experience and proven results.
Los Angeles Foreclosure Attorney Vincent Howard at HOWARD LAW can help. You can reach us toll-free at 1-800-872-5925 or send us a message online.
Study: Banks to blame for over 800,000 unnecessary foreclosures, Sept. 11, 2012, By Paul Kiel ProPublica
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Mortgage Forgiveness Act May Extend Through 2013, Sept. 4, 2012, Los Angeles Foreclosure Lawyer Blog