Mortgage lenders pay fines for fraudulent activity

When the sub-prime home mortgage bubble burst, it sent the economy into a tailspin from which we have not yet recovered. Many people in Chicago are still fighting hard to retain their jobs and their houses. Others stand on the verge of foreclosure and bankruptcy.

One of the important revelations that came from the sub-prime collapse was that some of the largest mortgage lenders in the country were engaging in risky and illegal activities, such as robo-signing. Those lenders were forced to pay a $25 billion penalty. Individual banks are coming to terms, too. Bank of America and Citigroup have agreed to settle fraud charges brought by the United States government. Bank of America will pay $1 billion while Citi will pay $158 million.

The government alleged that Citi sacrificed careful examination of documents in favor of achieving the plumpest bottom line. Citi has said that some of its activities in the home mortgage insurance sector were fraudulent. To repair Citi's missteps, the Federal Housing Administration had to step in to the breach and back Citi mortgages, some of which were already in default half a year after they were issued.

Banks have an array of assets at their disposal to pursue foreclosures and protect their loans. Homeowners in financial trouble who are facing foreclosure should know what resources they have at hand to protect their house. Attorneys versed in the laws of mortgage transactions and foreclosures can help struggling homeowners stop property foreclosure. For some, bankruptcy can be an option in appropriate circumstances. It can offer debt relief and help people get on the path to financial stability.

Source: Thomson Reuters, "Breakingviews: Citi, BofA prove too big to punish harshly," Agnes T. Crane, Feb. 17, 2012.

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