| CHARLOTTE, N.C.
CHARLOTTE, N.C. Oct 14 Wall Street's reaction
to the allegations that some banks cut corners while
foreclosing on 3 million homes since 2007: Pay your mortgage in
the first place.
The building furor over whether the largest U.S. mortgage
lenders used so-called robo-signers and incomplete paperwork to
force delinquent borrowers from their homes has mushroomed into
a probe by the attorneys general in all 50 states, with U.S.
Congressional hearings not far behind. [nN19590716]
Those on Wall Street, however, are largely unsympathetic,
insisting that possible errors in the foreclosure process are
beside the point, that the process begins only when a borrower
starts missing mortgage payments.
"If you didn't pay your mortgage, you shouldn't be in your
house. Period. People are getting upset about something that's
just procedural." said Walter Todd, portfolio manager at
Greenwood Capital Associates.
Some said the issue is one of personal responsibility for
one's own debts.
"Everyone's responsible for following the law. If we all
don't have to pay our mortgage, should we just stop paying
taxes, too?" said Anton Schutz, president of Mendon Capital
Advisers. "Your mortgage didn't get to a robo-signer by
accident, it's because you're not paying."
Robo-signers is the term for bank employees who signed
hundreds of foreclosure documents daily without reviewing
Take a Look-U.S. foreclosures under fire [ID:nN11106777]
Factbox-Foreclosure problems snowball [ID:nN06278011]
Graphic-Q3 foreclosures link.reuters.com/jud58p
The lack of review is why officials investigating the issue
say that some homeowners may actually have been unfairly
evicted from their homes.
Lawmakers in California, in a letter to federal authorities
last week, said reports from thousands of homeowners in their
congressional districts show an "apparent pattern" of practices
that led to foreclosures that could have been avoided.
Thousands of people reported that despite efforts to seek
loan modifications or other relief many financial institutions
"routinely fail to respond in a timely manner, misplace
requested documents, and send mixed signals" about what is
required to avoid foreclosures, the lawmakers said.
WHO'S TO BLAME?
Homeowners and consumer advocates also disagree with Wall
Street's characterization of who is to blame.
"We think this is the smoking gun that illustrates
widespread problems in the process," said Kathleen Day,
spokeswoman for the Center for Responsible Lending, a Durham,
North Carolina-based consumer advocate. "No one's saying that
foreclosures should stop forever, but lenders need to be
abiding by the law."
The executives for the largest lenders and others on Wall
Street have downplayed the worries over foreclosures as nothing
more than a technical speed-bump in a process that's still
accomplishing its main objective of removing delinquent
borrowers from their homes.
"We're not evicting people who deserve to stay in their
house," Jamie Dimon, JPMorgan Chase chief executive, said on a
conference call with analysts on the company's third-quarter
earnings on Wednesday. [ID:nN11126621]
JPMorgan, the second-largest U.S. bank by assets, said it
is reviewing 115,000 foreclosure cases, after suspending
foreclosure sales in 23 states last week, and expects the
review to be completed in a few weeks.
Dimon said he ultimately expects the review will have
little impact on pending foreclosures sales, though JPMorgan's
chief financial officer said during the call the bank amended
some of its processes.
On Friday, the chief executive of Bank of America Corp, the
largest U.S. bank by assets, described the process as clearing
the air around the bank's foreclosures, and the lender stood by
"We'll go back and check over our homework one more time,"
CEO Brian Moynihan said after a speech at the National Press
Club in Washington on Friday.
BofA has temporarily suspended foreclosures and sales of
foreclosed properties in all 50 U.S. states, pending a similar
Finance executives conceded that while mistakes are being
made in the foreclosure process, borrowers are often delinquent
for years before being removed from their homes.
In announcing its nationwide foreclosure halt, Bank of
America disclosed the average borrower missed payments for 18
months before their home was repossessed.
JPMorgan, in its third-quarter earnings presentation,
disclosed that the average delinquency at foreclosure was 448
days, with as many as 40 percent of foreclosed homes vacant at
the time of the seizure.
In New York and Florida, the bank disclosed, foreclosures
can take as long as two years.
(Reporting by Joe Rauch; Additional reporting by Maria Aspan,
Elinor Comlay and Dan Wilchins in New York; Editing by Leslie