Why Consumers Need Credit Unions

A mistaken home foreclosure in Florida illustrates the importance of doing right by your borrowers and conducting tough transactions with tact and attention.

 
 

Is your credit union Twitter feed is looking a little bare this week? If so, I recommend sharing the tale of this unfortunate homeowner who lost her home in a foreclosure sale despite being current on her mortgage payments. ThinkProgress.com, a website supported by the Center For American Progress Action Fund, reported this story highlighing consumer frustration with banks. But this June posting does more than present an opportunity to shake your head and "tsk tsk" banks; it spotlights the opportunity credit unions have to better serve consumers. And, of course, it serves as a cautionary tale to make sure you have your processes and paperwork in order.

In 2011, Florida business-owner Jo-An Seipp fell behind on the mortgage payments for the home she shared with her husband and teenage son. Wells Fargo, her bank, consequently started foreclosure proceedings in 2012. At the final judgment concluding the foreclosure lawsuit, the judge gave Seipp 60 days to pay the money she owed on the mortgage to bring it up to date. If she paid the $141,441.81 balance, then Wells Fargo would reinstate the loan. Seipps paid it off in the allotted 60 days, but her story doesn’t stop here.

Unfortunately for Seipp, the bank inadvertently sold her property to a real estate investment firm called Crimson Ibis, LLC. According to ThinkProgress, Seipp and her family are living in the house and paying the mortgage, insurance, and taxes on it while a third party owns the property. Crimson Ibis is not obligated to return the title to Seipp unless the court orders it to do so. Despite the fact Seip paid the money she owed on her mortgage, there is nothing Wells Fargo or the judge could do. The property is gone. At this point, all Seipp can do is sue the bank for damages.

A spokesperson for Wells Fargo told ThinkProgress the bank is “doing all that it can to make it right for the customer.” The messy situation will take time to resolve and Seipp's lawsuit is currently pending before a judge.

Instead of selling the property, the bank could have done a number of things, from refinancing the mortgage to honoring the court approved 60-day deferment. During my time writing for creditunions.com, I’ve heard many stories of credit unions helping members through situations very similar to this one. How would your credit union have helped the Seipp family?

Banks are not the only financial institutions to foreclose on homes, credit unions must do it too, sometimes it is a necessity. But inadvertanly selling the property to a third party shows that papers and processes were not in order. For a large bank like Wells Fargo, size could be a factor. This oversight might not have occured in a more personal, community-based financial institution.

 
 

Aug. 21, 2013


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