Connect with us

Hi, what are you looking for?

The American GeniusThe American Genius

Economic News

Big banks to review complaints alleging illegal foreclosures

After a bitter fight, homeowners are finally being compensated for big banks illegally foreclosing, but in a cruel twist, the government is firing independent complaint reviewers and asking the banks themselves to determine if they were abusive.


big banks money

Big banks back in the self-review business

Before the housing crash, big banks wrongfully foreclosed on thousands of American homeowners, and after a lengthy legal battle between banks and state and federal governments, financial institutions were required to revamp their entire system, pay homeowners billions, and stop robo-signing foreclosure documents without a human reviewing them for accuracy, which is what led to many illegal foreclosures.

On one end of the reparation spectrum is state governments failing to actually use the funds to help homeowners, rather are using the millions for general budget shortfalls, often having nothing to do with housing or wronged homeowners.

At the other end of the reparation spectrum is the Office of the Comptroller of the Currency which has now done away with the requirement of independent third-party reviews, as they attempt to distribute the cash to wronged homeowners, putting these homeowners in a bad position not only having been abused by the big banks, but having their funds misused by states, and back in the hands of the very banks that wronged them.

According to Deal Book, “To accelerate the payments, the comptroller’s office decided to cut out the middlemen, the consultants, from the reviews. In a conference call last week, the government outlined a plan to use the lenders instead, according to people with direct knowledge of the discussion. The big banks will now have to assess each loan for potential errors, which will help determine the size of the payments to homeowners.”

The mortgage settlement indicated homeowners would begin receiving payments last year, but this spring looks to be the earliest that might happen.

Advertisement. Scroll to continue reading.

The fine line between cost savings and a slap in the face

[ba-pullquote align=”right”]“The whole process has been a slap in the face to homeowners and a slap on the wrist to banks. The latest development shows how there has been no accountability.”[/ba-pullquote]The Office of the Comptroller of the Currency cites that the independent reviews have been extremely costly, and having only reviewed a tiny portion of the nearly 500,000 complaints filed by homeowners in just over a year, already costing $2 billion in fees, not to mention that some reviewers’ competency and objectiveness has been called into question.

As a result, the Comptroller has opted to put it back on big banks, which is akin to a court ordering an abusive parent to give themselves counseling and training, or ordering a recovering alcoholic to bartend at a rehab facility as punishment for her third DWI.

“The whole process has been a slap in the face to homeowners and a slap on the wrist to banks,” Isaac Simon Hodes, an organizer with the community group Lynn United for Change told DealBook. “The latest development shows how there has been no accountability.”

Compromised decision making skills victimized homeowners nationwide, and giving the abusers discretion to decide whether they were abusive or not is puzzling to many, yet funneling billions into consultants who are very slowly reviewing the complaints at an extremely high cost isn’t an effective method either.

Worry not, the Comptroller says, because they will be randomly checking the reviews. “Regulators will verify and test the work of servicers to slot borrowers into broad categories and then regulators will determine the amount of payment for each category,” explained Morris Morgan, the deputy comptroller in charge of supervising large banks.

Advertisement. Scroll to continue reading.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.



  1. Agi Anderson, ePro

    February 15, 2013 at 1:09 pm

    It has and continues to appall me that lenders are getting away with mortgage murder!!!

Leave a Reply

Your email address will not be published. Required fields are marked *


American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.



Real Estate Technology

(TECH NEWS) It turns out that Internet of Things, like smart bulbs in homes, are not secure and give up your info - here...

Real Estate Marketing

(MARKETING) Your fancy, self-animating website might be making people violently ill, even if it is insanely beautiful. Sorry...

Real Estate Marketing

(MARKETING) Conduit is a CRM that does more than CRM, it analyzes your networking data to help you see how to improve your relationships.

Real Estate Corporate

(REAL ESTATE) Zillow has long been a data powerhouse, but a lawsuit about a $150M listing offers a look into listings claims.


The American Genius is a strong news voice in the entrepreneur and tech world, offering meaningful, concise insight into emerging technologies, the digital economy, best practices, and a shifting business culture. We refuse to publish fluff, and our readers rely on us for inspiring action. Copyright © 2005-2022, The American Genius, LLC.