Fed: Banks Did Not Make Single Wrongful Foreclosure

Consumer advocates livid over finding

By Kevin Spak,  Newser Staff

Posted Mar 11, 2011 10:52 AM CST

(Newser) – The Federal Reserve’s probe into the robo-signing scandal and other abusive mortgage practices failed to turn up a single wrongful foreclosure, the Fed’s Consumer Advisory Council revealed yesterday. But many consumer advocates on the council, which is made up of outside experts, complained that the Fed had too narrowly defined “wrongful foreclosure,” with some expressing fears that the public wouldn’t take the review seriously, the Huffington Post reports.

The Fed defined “wrongful foreclosure” as the repossession of a home whose owners were not significantly behind on their payments. But that leaves out a host of cases in which banks made serious errors, like inflating past-due amounts, or having the wrong party bring a foreclosure action, panel members argued. “That homeowners were not delinquent has never been our contention,” said one member of the council. “Our contention is that many of these foreclosures were avoidable.”

A bank owned sign is seen in front of a foreclosed home on December 7, 2010 in Miami, Florida.
A bank owned sign is seen in front of a foreclosed home on December 7, 2010 in Miami, Florida.   (Getty Images)
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