Documents obtained by ProPublica suggest the government coddled mortgage servicers in its flagship foreclosure prevention program despite frequent and serious errors.
A simple rule meant to cut paperwork for U.S. companies has grown into one of the biggest multinational tax breaks around, costing the United States and other governments billions of dollars in lost taxes each year. It thrives thanks to determined business support, including a campaign two years ago that forced the Obama administration to retreat from altering it and tax professionals worldwide who exploit its benefits.
Millions of people face losing their homes in the continuing foreclosure crisis, but homeowners often have more than the struggling economy and slumping house prices to worry about: Disorganization within the big banks that service mortgages has made a bad problem worse. Sometimes the communication breakdown within the banks is so complete that it leads to premature or mistaken foreclosures.
Chase Home Finance has rejected some mortgage modifications because it considered the homeowners’ hardships to be temporary. The Treasury Department has since barred that practice, but those homeowners are left struggling to avoid foreclosure.
An examination shows how mortgage servicers have created unnecessary hurdles to getting loan-mods and have violated the government’s rules for the program. “There’s a real resistance on the servicers’ part to making permanent modifications,” said Diane Thompson of the National Consumer Law Center.
By PAUL KIEL, ProPublica
Starting with this post, we’ll be updating you every month on the status of the taxpayer-funded bailouts we track in our database — namely the TARP and government rescue of Fannie Mae and Freddie Mac. Recent reports by the New York Times and Wall Street Journal have drawn attention to the billions in revenue that the Treasury Department has collected from companies early in returning their TARP investments. While those returns have been encouraging, there’s no question that the taxpayer remains deep in the red.