Feds target smaller mortgage companies over fraudulent practices

Last week, a senior official for the Federal Reserve System stated that eight small mortgage lenders should be fined for their mishandling of mortgage documents, which include fraudulent signatures and sloppy paperwork.

The eight lenders, which were not part of the national foreclosure settlement, include SunTrust Bank, MetLife, U.S. Bankcorp, PNC Financial Services, EverBank, OneWest, Goldman Sachs and HSBC’s U.S. branches.

Foreclosure attorneys, judges and homeowner advocates say many people are still losing their homes because of the faulty documents originating from these smaller companies.

The national foreclosure settlement stayed focused on the larger banks who eventually settled investigations by paying a $25 billion settlement to state attorneys generals and the federal government. But the practice of robo-signing and mishandling of mortgage documents is still a problem with smaller mortgage companies.

These smaller mortgage companies have been found to employ robo-signing and fraudulent signatures in numerous states including California and New York.

The thousands of homeowners facing foreclosure from the eight smaller banks can have their cases reviewed, but few homeowners know this is an option for them.  A foreclosure lawyer may be able to help a person prevent or delay foreclosure if their documents contain inconsistencies or are believed to be fraudulent.  

A defaulted home owner can hire a foreclosure attorney to help them all legal aspects of their foreclosure including trying to negotiate for a mortgage modification.