SEC: Banks Should Disclose Foreclosure Crisis Losses

The U.S. Securities and Exchange Commission (SEC) issued a letter last week telling banks to disclose how much money they lost as a result of the foreclosure crisis of September and October.

SEC Urges Banks to Disclose Losses

The SEC wants lenders that endured stoppages in mortgage foreclosure filings to alert investors about situations that could possibly have an “unfavorable impact” on financial results. The institution issued the letter to make sure banks disclosed the “potential risks and costs associated with mortgage and foreclosure-related activities,” the SEC said.

The SEC, which is in charge of regulating the securities and stock industries in the U.S., suggested that the affected banks set aside contingency funds to cover legal and other costs. If the banks cannot make a solid estimate of how much they might lose as a result of the foreclosure freeze, they should issue a release saying so.

Foreclosure Freeze Still Affecting Lenders

The large institutions affected by the foreclosure freeze are still feeling the impact of the crisis.

Bank of America and GMAC Ally have restarted foreclosures in 23 states, but Chase and PNC Bank are still stuck reviewing alleged wrongdoing in 23 states.

Foreclosure Freeze Background

The foreclosure freezes first started in late September when Ally GMAC’s mortgage division stopped foreclosures in 23 states to investigate whether its employees were taking all the proper steps before making home seizures. More specifically, lawyers had uncovered potentially fraudulent measures being taken by the bank. Employees known as “robo-signers” were signing off and filing thousands of pages of paperwork they most likely never took the time to read. Banks probably resorted to robo-signing in an effort to get out from under huge backlogs of foreclosures that stacked up due to a high volume of defaults after the mortgage meltdown and financial crisis.

Ally was just the first domino to fall. Ten days later, Chase Bank stopped foreclosures in the same 23 states to investigate the same potential problems. A few days after that Bank of America halted foreclosures in those 23 states. PNC Bank followed suit later that week on the same day Bank of America curtailed foreclosures across the rest of the nation. The federal government does not support the idea of a nationwide foreclosure moratorium, but attorneys general in 50 states are taking part in a joint investigation of foreclosure practices.

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disgruntled

GMAC (Ally) is one of the biggest jokes on the planet. Have been trying for over a year to get a modification, after all that time finally found out last week they have decided to send it to foreclosure. I just love the way that they state “we are dedicated to help our customers”, nothing but b.s. And before all of you start going off about people buying too much house, not the case here, it’s called having to take a 20K cut in salary, THAT’S WHAT SUCKS!!!!
http://www.granthammond.com/ Grant Hammond

What’s interesting to me about foreclosures is that the aggregate number of foreclosures have not declined and really, the number of mortgage delinquencies have not either. But, the local and regional banks are now taking a much harder line on where they price these foreclosures which is seeming to help round of the bottom of the price market. Are you seeing the same trend? As for these gigantic national banks…well, they are running on rules that lack any logic from my point of view.
NIGHTMARE

I lost my job so I thought I would try for Obama’s loan modification. What a JOKE, the bank never told me they would start foreclosure right away and start running up lawyer expenses that I had to pay. Three months after asking for help they notified me that the owner of my mortgage isn’t doing any modifications! I tried to pay my normal payment and they said NO you have to pay it all including lawyer fees or nothing! Two month later they said they would come up with a repayment plan if I paid Lawyer fees and expenses. I borrowed from family and paid $4,000 to lawyer and $2,000 to mortgage company. They then sent me a new payment plan that raised my normal payment $400 a month…..THAT HELPS? Worse off than ever but still trying save our family home I agreed to try an outside company through the bank for a repayment plan. Two more months, hundreds of hours work and we finally had a new plan. I sent a check and signed papers….it was finally over……..not so quick. Tried to make the second payment and they said you can’t do. We never received your first payment. Sent documentation showing they cashed the check and asked for help. Two more months and I received a check returning my payment along with a note that your home is being sold at Sheriff Sale and nobody can stop it! They were right, it was sold and the same bank bought it back. As far as I’m concerning they STOLE MY HOME and the government helped them!!!