The decline of the housing sector resulted in an unprecedented amount of underwater mortgages. The rate of foreclosure was more than expected. Equity had all but vanished in the wake of the recession. Subsequently, a recent surge in housing prices may have been too little and too late for many distressed homeowners. As of August, approximately 12.2 million (24% of those with mortgages) homeowners owed more than their homes were worth.
The amount of foreclosures banks were faced with caused a significant delay in the collection process. There were simply too many houses underwater for lenders to take action. Now that encouraging trends in the housing sector appear to be sustainable, banks can now focus on collecting their properties. Of particular concern, however, is their method of procuring the individual subject properties.
Hundreds of underwater homeowners have already accused banks of using excessive and aggressive tactics to collect. More specifically, the property management companies employed by said banks appear to be going too far in their methods of retrieval. Homeowners are accusing these firms of breaking into their homes, damaging their personal property, and bullying those who live there.
Banks were forced to enlist the services of property management companies, as the foreclosure task was too big for one institution. In doing so, lenders gave property management companies the power to occupancy and preserve the homes until they were resold.
Unfortunately, some of these firms are facing questions on their potentially illegal tactics in securing the properties. Safeguard, in particular, is facing a myriad of complaints.
In Illinois, a lawsuit filed by the state’s attorney general accuses Safeguard subcontractors of wrongfully dispossessing hundreds of homeowners through tactics that include: breaking into homes, bullying tenants, and even damaging the homes in some cases.
According to Lisa Madigan, the state’s attorney general, more than 400 complaints have been filed in regards to Safeguard’s questionable approach.
Contradictory to the complaints, are reports from Safeguard officials. Those associated with the company maintain that they follow a system in determining the occupancy of a property before starting any work.
“We adhere to the highest standards in the industry and are proud of our record of quality,” Diane R. Fusco, a spokeswoman for Safeguard, told The New York Times. “Not only do we work quickly to correct and resolve the issue with the home owner, we fully investigate the matter to identify and address the root cause.”