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4 Ways the Big Banks are Still Screwing Homeowners — And How They're Fighting Back

Here's how the banks are still doing exactly as they please when it comes to homes. But there's hope.
 
 
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It's been five years since the bursting of the housing bubble kicked off the financial crisis that shook the world.

And in those years, the banks received trillions in bailouts and ultra-low-interest loans while millions of homeowners around the country have been left to fend for themselves as they faced down foreclosure with little help from the government. Banks have  foreclosed on 4 million homes  since 2007, and there are millions more to come. Proposed settlements have been weak, and programs designed to help keep people in their family homes have done little other than funnel money back into the pockets of the same bankers who created the crisis. 

The latest news doesn't get much better — progressive online organizing group  CREDO sent an email  out this week claiming that the task force President Obama announced in his State of the Union, led in part by progressive champion New York Attorney General Eric Schneiderman, has been understaffed, perhaps deliberately so.

“This matters not just because of broken promises, but because the foot-dragging has serious consequences. Many of the various types of fraud that this task force is supposed to be investigating have statutes of limitations, some of which will run out on the very last securitization deals completed before the housing bubble collapsed,” wrote David Dayen at FireDogLake. The delay in staffing the task force, he noted, looks a lot like letting the clock run out. 

“The latest task force has not provided the needed results, and as a consequence of inaction, homeowners continue to be victimized,” Matt Browner Hamlin, an organizer with  Occupy Our Homes , told AlterNet. The big banks are still gaming the system, screwing over working families while continuing to profit. Here's four ways the banks are still doing exactly as they please despite all the task forces and settlements — and some ways you can help fight back.

1. Taking Advantage of Government-Backed Refinance Program to Rake In Profits

Cora Currier at ProPublica reported this week that banks that refinance homes under the federal government's  Home Affordable Refinance Program (HARP)  are still sticking homeowners with high interest rates for their underwater mortgages.

Designed to help people who find themselves owing more on their home than they could sell it for (because the housing bubble artificially inflated home prices, which fell dramatically when the bubble popped), HARP was supposed to let those borrowers “take advantage of lower market interest rates.” In fact, though, it's become another way for banks to make money.

According to a new report by an investment group, the incentives for the program don't push banks to give customers the lowest rate possible, instead allowing them to set rates that might not be much of an improvement over the ones they currently have. In addition, Currier wrote, “The report says the big banks are able to make a considerable profit from refinancing their existing customers under HARP, and that there is little incentive for them to go outside their own customer base and seek out more HARP business on mortgages that originated with other lenders.”  

Who are the culprits? You guessed it, the big-bailout big banks: JP Morgan Chase, Bank of America and Wells Fargo. But HARP is a government program, and the responsibility for making sure it isn't abused should lie with the federal government.

“Banks finding ways to screw homeowners under federally sanctioned programs is "dog bites man" news,” Browner Hamlin said. “This is what we've seen throughout this administration, and there's zero evidence to suggest helping homeowners at the expense of banks is suddenly going to become the administration's priority.”