Over the last several years, since the housing bubble burst, many people have struggled through foreclosures. While there are instances where foreclosures were correctly processed under federal and state laws, there are others that were completely off the mark.
Sadly, there are many instances where people have experienced wrongful foreclosure. This can happen due to simple clerical errors, careless record keeping on the bank’s part, unethical practices or even the poor judgment of a bank employee or representative.
Clerical errors and careless record keeping
There have been numerous instances of the wrong houses being foreclosed upon by banks. Unfortunately, for these homeowners, the result is disastrous. People have come home to find their locks have been changed, possessions removed — either sold, given away or thrown out. In some cases, destruction has been done to the property.
It is very common to find these foreclosures were wrongly done due to a clerical error or simply poor record keeping. A typo in an address, neglectful in recording a mortgage holder selling the house or not updating records to show a mortgage was paid off are some types of errors that have been made on the part of the banks.
Banks have been “unable to efficiently handle the volume of distressed assets that are coming through,” Rick Sharga, of California-based foreclosure tracking firm RealtyTrac said, according to ABC News in a 2010 report. “We also are seeing the results of what had been less-than-rigorous paperwork and documentation management over the last decade or so as loans became commodities that were packaged, sold, repackaged and resold.”
“It’s almost inevitable that, at some point, if you don’t have really tight control on these transactions, you’re going to have some issues,” Sharga added.
Unethical practices
Many homeowners struggling to pay their mortgages try to work out an agreement with the bank. However, in the midst of working out mortgage modifications, banks often go ahead and foreclose anyway. Sometimes, it is due to a lack of due diligence or a deficiency in streamlining their departments to keep records and/or communications up to date.
Other times mortgage servicers have been accused of unethical practices. For instance, telling homeowners seeking loan modifications they needed to fall behind in payments before they could be eligible, as ProPublica notes. The borrowers then suddenly found themselves in a foreclosure situation where they were not in one before. Next thing they know, the banks are auctioning off their homes.
Poor judgment
While typos may be forgivable as long as they are corrected and no harm is done, what about poor judgment? Just recently, an Ohio woman came home from vacation to learn her house had been repossessed while she was away. Her locks were changed, possessions were gone and the bank refuses to take responsibility and pay her for damages.
The bank was supposed to foreclose upon a house across the street, but the GPS led them to the woman’s home. The representatives saw the grass was overgrown and, rather than checking the address before taking action, they assumed they had the right place.
While many excuses and reasons have been giving for wrongful foreclosure, this may possibly be the first time a GPS fail was blamed.
Summary
According to an April 2013 Huffington Post report, about 30 percent of people foreclosed upon in 2009 and 2010 had struggled to battle banks for wrongly foreclosing on their homes, many of which had never actually defaulted on their loans.
While this data is older, media reports that tell tales of people being locked out, possessions taken and struggling for compensation illustrates banks foreclosing on the wrong houses is still a very real problem. Sadly, in one case it resulted in a May 2013 death. One 62-year-old man was so stressed out by a bank holding him responsible for his neighbor’s defaults that eventually, he collapsed in court after continuing to battle the bank. His estate alleges he died of heart disease brought on by the wrongful foreclosure.
There are numerous documented cases of lenders claiming the wrong houses. While many have apologized or tried to set things right financially, the bottom line is that it never should have happened in the first place. Foreclosures should be double- and triple-checked to ensure no errors or lack of communication has been made before taking such drastic action, essentially destroying everything a person owns.