Behind the Foreclosure Crisis, Big Banks' Reign of Error

Dana Milbank wrote Behind the foreclosure crisis, big banks' reign of error.

"Along the way, a simple refi became a months-long odyssey: rates misquoted, interest charged on a phantom account, legal documents issued in wrong names, a mortgage officer who disappeared for days at a time (first it was his birthday, then his laptop was in the shop), a bounced check from Citibank's own title company, and the freezing of our bank accounts.

For me, this amounts to no more than the hassle of arguing with Citibank to fix its 'mistakes.' But consumer advocates tell me these are typical of the screw-ups by the big banks that service home mortgages. And these errors - accidental or otherwise - are driving large numbers of people into default and foreclosure when it otherwise would not have happened."

"Republicans are aiming to repeal the Home Affordable Modification Program, the Obama administration's main response to the foreclosure crisis. The program, by all accounts, has been disappointing, helping only about 600,000 homeowners of the 3 million to 4 million projected. But its failure, watchdog groups say, was caused by the mortgage servicers' ineptitude - lost paperwork, bad accounting and the like - and lack of concern about whether the mortgages they service (but don't own) go into default. Rather than crack down on the banks, the House Republicans would kill the one program that, at least in theory, gives borrowers some chance of avoiding foreclosure. "If you take that away, you've got nothing," says Julia Gordon, senior policy counsel at the Center for Responsible Lending. "The servicers can just do whatever they want.""