Most Victims of Bank Wrongdoing Will Get $1000 or Less Under Settlement
By Consumers Union on Friday, April 19th, 2013
Last week the Wall Street Journal reported some sobering news: The vast majority of borrowers being compensated for mortgage related abuses will get $1,000 or less, under a $9.3 billion dollar settlement between the U.S. and banks.
If that were not bad enough, yesterday the New York Times reported that homeowners trying to cash their settlement checks–after waiting years in some cases– were told, “funds unavailable.” What? The settlements have been highly criticized by many but this is the first time the word “insufficient” has been coupled with “funds” when it comes to settlement payouts.
According to the Federal Reserve, the problem has been fixed and those who try to cash their checks from now on should have no problem. Even so, we believe the problem is much deeper and calls for a more comprehensive solution. Here’s why:
- The individuals receiving these payouts are the victims of bank wrongdoing.
- Public confidence is further eroded when the victims of banks’ wrongful practices must endure another blow due to incompetence in the system that is supposed to provide the payouts.
- Preventative consumer protections can be put in place to avoid wrongful foreclosures.
That is why Consumers Union stands behind the need for strong laws to prevent the abuses in the first instance. States should go further and pass laws to prevent wrongful foreclosures. No homeowner who is eligible for foreclosure relief should lose a home because of bank wrongdoing. Here is the Consumers Union and the Center for Responsible Lending road map for what states should do to protect consumers from further abuse.
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