Mortgage lenders draw scrutiny for using bullying tactics in home foreclosures
By John H. Harris
More than 10 million foreclosures have piled up since the beginning of the mortgage crisis and some of the nation’s largest banks are turning to property management firms to physically inspect the homes, determine occupancy and preserve the homes until they can be resold.
These firms, like the Ohio-based Safeguard, are coming under fire for questionable and possibly illegal tactics to force residence from their homes without legal grounds to do so.
Illinois is the first state to take these property management firms and contend in a lawsuit that Safeguard wrongfully dispossessed hundreds of homeowners in the state. Illinois attorney general, Lisa Madigan, contends that Safeguard broke into homes even with glaring evidence the homeowners still occupied the dwelling, bullied tenants into leaving their homes without legal obligation to do so and even caused significant property damage to the same homes they were sent to preserve.
“This is a homeowner’s worst nightmare,” Ms. Madigan said in an interview on Friday, noting that her office had received more than 400 complaints about Safeguard.
In December, Barry Tatum returned to his Chicago home to find his front and back doors torn from the hinges leaving his home and possessions exposed. Tatum initially thought he had been robbed but was shocked to find that the “break-in” was at the hands of a subcontractor for a property management firm hired by his bank, Bank of America, with whom he had fallen behind on his mortgage. According to the New York Times, they reviewed a copy of a letter issued to Mr. Tatum from the subcontractor informing him that the bank had the right to enter and secure the property.
“It’s the most depressing thing,” said Mr. Tatum, who ultimately got the management firm, Safeguard Properties, to replace the doors.
Legal aid offices in California, Nevada, Florida, Michigan, and New York have the most complaints and call about Safeguard’s aggressive tactics.
Adam Taub, a lawyer in Michigan who represents homeowners in cases pending against Safeguard points out, “There seems to be a financial incentive to find a vacant home even when it might not be because there is more work to be done at that point.”
The ‘big lenders’, including JP Morgan Chase, Bank of America, and Citibank, were already hit with a $26 billion payout in a settlement last year for failing to police third-party contractors and claims that banks relied on outside lawyers to tackle the mountains of foreclosures without ensuring their accuracy.
Safeguard spokeswoman, Diane R. Fusco, contends, “Our mortgage servicing clients routinely and thoroughly audit our policies and procedures,” a sentiment echoed by the lenders.
Courts are bottle necked with delays and older foreclosure cases and according to RealtyTrac, in Illinois the foreclosure process took 817 days as of the second quarter of this year.
Homeowner who have never missed a mortgage payment have collided with Safeguard as well. Linda Haddad bought a forclosed home from JP Morgan Chase and two months later received a call from a neighbor telling her Safeguard was emptying her home and changing the locks.
Haddid was advised by Safeguard to “straighten it out” with the bank. By the time she did, Safeguard had done tens of thousands of dollars’ worth of damage.
These bullying tactics by Safeguard like using fear to drive people from homes, changing locks and shutting off electricity violate laws requiring lenders to obtain a court order before evicting homeowners. One of the very cornerstones of the American dream is eroding at the foundation and displacing families across the nation.