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Federal Government Has Done Little to Curb Mortgage Foreclosure Fraud

A recent Reuters' examination has found that the federal government still has not criminally prosecuted any of the "big banks" or other mortgage companies for questionable foreclosure practices since the housing meltdown began in 2007 - even though federal judges throughout the country have found evidence of wrongdoing.

Evidence of Foreclosure Fraud?

The Justice Department has claimed evidence of criminal liability is hard to find, but who can forget the "robo-signing" scandal in which bank employees were signing foreclosure affidavits they hadn't read or checked - and then their signature was notarized when they were not even present. Since then, evidence of foreclosure fraud has only grown.

For example, according to a New York federal bankruptcy judge's ruling and additional documents reviewed by Reuters, there is evidence indicating that at least a dozen promissory notes containing illegal changes and forged signatures have been filed in one bankruptcy court alone.

Reuters also reported on a recent federal bankruptcy hearing in which a New York bankruptcy judge commented on Bank of America's loan modification efforts. In response to the bank's assertion that they had been working to modify a debtor's mortgage for almost a full year, the judge stated, "Bank of America issues constant press releases about how it is responsive to their borrowers on these issues. They are not, period." The judge continued, "Whoever is in charge of this program and their supervisor, who should be following it, should be fired" because "they are frankly incompetent."

In Alabama, another federal bankruptcy judge also recently held that a different large bank had filed at least 630 sworn affidavits that contained false "facts" - including statements that some homeowners were late on payments that were not even due yet.

Foreclosure Defense Options

As long as banks and mortgage-service companies continue to use fraudulent foreclosure practices such as these, homeowners need to be vigilant in protecting their rights. However, it may difficult to know when "big banks" are attempting to take advantage of homeowners, which is when an experienced attorney can help navigate the often complicated laws.

Moreover, even in those situations in which the bank is not utilizing fraudulent practices, there are still other options for homeowners behind on their payments - namely bankruptcy. By filing for Chapter 7 or Chapter 13 bankruptcy, homeowners are able to immediately stop foreclosure actions in progress. This gives homeowners the time they need to determine what option is best for them. In some instances, homeowners may be able to utilize other loan modification strategies or even be given time to get current on their payments - with the ultimate goal of keeping their homes.

Source: Special Report: The watchdogs that didn't bark

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