In 2011, Jeanne Brigner reached out to my office after her mortgage servicer misapplied her monthly mortgage payment – an action which led her into foreclosure. Unlike many Ohioans, Jeanne was able to keep her home, but only after paying thousands of dollars in unnecessary fees. Unfortunately, the state of mortgage servicing is so bad that Jeanne is considered one of the lucky ones
Last week, in Columbus, Youngstown, and Toledo, I heard from Jeanne and other homeowners who were unjustly foreclosed on – upending families and economically depressing local communities. We all know the devastation that foreclosures inflict on our communities, homeowners, and families.
From fraudulent legal documents to scheming mortgage servicers, U.S. homeowners have endured egregious violations by big banks. Enough is enough.
In 2010, America discovered that the same Wall Street banks that had brought our economy to the brink of collapse were taking advantage of homeowners to pad their own pockets.
While one in 10 Ohioans was out-of-work, the nation’s largest banks were generating billions in profits by ignoring the law and foreclosing on homeowners who were trying their hardest to pay their bills on time. And today, middle-class families are still suffering from mortgage lenders’ malfeasance.
Earlier this month, 10 of our nation’s largest banks reached an agreement to pay $8.5 billion to homeowners who were affected by unlawful foreclosures. The settlement money will be divided among all 4.4 million eligible homeowners—including about 96,000 Ohioans. Resources will be split between mortgage relief for borrowers, including loan modifications, and direct payments to homeowners. While borrowers will be contacted by the end of March if they are eligible, I also urge you to contact the Ohio Housing Finance Agency, a housing counselor, or my office if you believe you are eligible but have not been contacted.
Though each borrower is eligible for up to $125,000 in relief, most will receive much less than that. If every eligible borrower were provided equal relief, each household would only receive about $2,200. This would hardly compensate families who lost countless hours in disputes and possibly their homes as a result of wrongful foreclosure proceedings.
That’s why I’m calling for some common sense reforms that will make this a better deal for homeowners.
Last week, I sent a letter to regulators demanding that every dollar distributed gives homeowners the maximum benefit and prevents banks from avoiding their responsibilities.
But while these payments will provide some relief to homeowners, we must also stop these abuses before they start. That’s why I’m urging regulators to use the lessons learned from the foreclosure review process to fix a broken mortgage servicing model.
If we’re going to shore up our economy, we need reforms like those in my Foreclosure Fraud and Homeowner Abuse Prevention Act. The reforms I have proposed would require banks to provide meaningful protections for borrowers before they near the point of defaulting; participate in loan modifications; stop foreclosures when borrowers are trying to work with banks to pay their bills on time; and hire enough staff to work with homeowners instead of issuing default judgments on foreclosures.
As the recent bank settlement shows, this bill would have prevented bank abuses if it had been in place in 2009 and 2010. Congress must pass this important legislation.
The truth is that we all have a stake in this fight. Even the most responsible homeowner can get caught up in the web created by sloppy mortgage servicing practices. And entire neighborhoods see their property values decline when foreclosures increase. That’s why we all benefit when these big banks take responsibility for their actions.
We must provide relief to the millions of homeowners forced into foreclosure. Now is the time to move forward and correct the problems in our housing market to protect future borrowers.
Sherrod Brown is a United States Senator from Ohio.