Foreclosure Rescission Notice? May Indicate Bank Broke Foreclosure Rules and Took Shortcuts

Lenders like Bank of America, JP Morgan Chase, Wells Fargo and Citigroup, systematically broke rules and took paperwork shortcuts when foreclosing on homes last year according to a report by federal bank regulators released on Wednesday. Bank examiners revealed that the banks under investigation following the "robo-signing" crisis employed foreclosure practices that "failed to conform to state legal requirements." 

 

According to agreements signed with the Federal Reserve, the Office of the Comptroller of Currency and the Office of Thrift Supervision, the banks must stop these sorts of practices and fix the problems with how they process home foreclosures. All three agencies determined that their practices were "unsafe and unsound." 

 

Yet the agencies' efforts don't appear to have gone far enough in identifying the full scope of the problem. In a joint report on the findings, it appears that they did not fully review whether borrowers were assessed improper fees and they did not investigate servicing issues outside of the foreclosure process. 

 

In addition, the agencies only examined a small number of files from among the thousands of foreclosures processed by mortgage servicers. In the joint report, the agencies actually admit that "the reviews could not provide a reliable estimate of the number of foreclosures that should not have proceeded." 

 

This comes as no surprise because our lawyers have been hearing from more and more homeowners who have received notices from their mortgage servicers rescinding a past foreclosure. A rescission notice means that the bank has "cancelled" or reversed a foreclosure that took place. 

 

While it may seem like good news to receive a notice that cancels out a prior mortgage, for many homeowners "the damage has been done." For many of these people, they have been displaced from their home and have been forced into a less than acceptable living situation. We have also heard reports from homeowners who have lost valuable personal property in a past foreclosure.    

 

Homeowners who receive a foreclosure rescission notice from a bank many times don't even know why the foreclosure has been rescinded and they can't seem to get answers from the foreclosing attorney, the bank and even the court. They often don't know what rights they may have to potential damages for being wrongfully foreclosed on in the first place.

 

Phillips Garcia Law focuses on illegal foreclosure lock outs and trashouts. If you have received a foreclosure rescission notice and believe that you've lost your home and possessions to a wrongful foreclosure, you may have legal rights. To request a complimentary consultation with a member of our legal team contact us.