Foreclosure Audit Highlights Potential Bank Deception

The Huffington Post yesterday revealed information from a federal audit of five major banks. The data revealed to HuffPo sources shed more light on the problems related to America's foreclosure logjam.

Bank of America, JP Morgan Chase, Citigroup, Ally Financial and Wells Fargo engaged in misleading and potentially fraudulent behavior in its foreclosure proceedings, according to the report. Specifically, the audit unearthed violations of the False Claims Act and concluded that all five lenders "effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents," the Huffington Post reported.

The foreclosure process in Illinois, specifically, has been tied up by mishandling of the foreclosure process, ranging from attorney-altered documents to the "robo-signing" debacle of last year.

Perhaps most importantly, as these types of allegations continue to surface, there will be added attention and dicussion on reform in the foreclosure/loan modification arena.


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  • Hope this is not a necropost, but given that the feds followed through and sued these folks, using members of the securities bar--

    --why did BoA buy Countrywide, if all it was buying was the lawsuits? Maybe the FDIC should have just liquidated it.

    --Isn't the government, by suing Ally, f/k/a GMAC, just suing itself? I thought the government owned it after it went belly up and got bailed out.

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