Mortgage Fraud Settlement: Are Banks Forgiving Debts that Don’t Exist?

In the last couple of weeks, we have been discussing the Mortgage Fraud Settlement that was struck with the biggest Lenders in the U.S… Because of its importance and current relevance, I will further the discussion today by pointing out some of the recent issues that have been developing.

mortgage fraud property guidingOur Florida Attorney General recently announced that claim forms are now being mailed out to Florida borrowers who lost their home to foreclosure between Jan. 1, 2008 and Dec. 31, 2011.  As we have discussed, the Settlement allocated roughly $1.5 billion in payments for 2 million borrowers across the country. The exact payment amount for each homeowner will be dependent upon the number of borrowers who actually participate in the Settlement program. Be advised that the National Settlement Administrator has already mailed postcards to eligible borrowers.

That being said, a $2,000 check in the mail would be lovely, but recall that the primary focus of the $25 Billion Settlement is intended to help struggling homeowners keep their homes, primarily through partial loan forgiveness (principal reductions), and refinancing.

Nevertheless, it seems the banks have tried to pull the proverbial wool over our eyes once again…

In recent reports, thousands of JP Morgan Chase debtors received letters “forgiving” debts that had already been legally discharged.  One homeowner in Connecticut received such a letter; however, that debt was already wiped out three years prior. Recently, a borrower here in Florida reports receiving notification that Chase was ”forgiving” $190K of debt that too, had already been discharged through bankruptcy. A Virginia resident also reported that BoA informed them that their $231K home equity loan was being forgiven, notwithstanding the fact that their debt was discharged last year.

I suspect that this is just the tip of the iceberg as there have been numerous reports of “faux debts” being “forgiven.” It is difficult to say definitively, but this could be seen as a scheme by the Lenders who are attempting to get credit for debts that they have no legal right to collect on anyhow.  If successful, the result will be that there is less help for distressed homeowners who could actually benefit from the Settlement money.

Remember the old adage, “If it looks like a duck….”

If you or someone you know had a home in Florida which was foreclosed on between 2008 and 2011, is still in the home but falling behind, or is upside down but current on the payments, you should contact a licensed Florida attorney to discuss your options. If you would like schedule a free consultation, or have any comments or suggestions on upcoming topics, please comment below or email

This is a generalized discussion and is not intended for any particular set of facts. Nothing in this article should be interpreted as creating an attorney-client relationship or attorney-client privilege. The laws frequently change as new laws are decided by the courts. Anything relied upon in this or any blog, is done so at the readers own risk.

The Guirguis Law Firm, PLLC
1423 S.E. 16th Place, STE 204
Cape Coral, Florida 33990
239.573.9939 Telephone
239.603.6965 Facsimile

Posted on October 10, 2012, in Legal and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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