Federal and state regulatory agencies rarely go after the largest banks or mortgage companies, unless there is an economy-wide scandal or especially egregious acts of preying upon consumers. But even then, it is more likely that banks and large lenders will not be targeted directly. The consequences for regulators in going after these giant corporations are far too great, as the largest financial institutions in the country bankroll the state and federal governments.
Take the cases of Countrywide and the governor of Illinois, Rod Blagojevich. Countrywide had been making subprime loans for years to borrowers who could never hope to pay them back. But few states ever looked into the bank's lending practices until the subprime mortgage market collapsed and the foreclosure crisis began to create a drag on the national economy. Then states began investigations and lawsuits against the company, but it was already almost too late, as the company had sold itself to Bank of America. Why did the states wait so long to address obvious predatory lending?
And the governor of Illinois was just recently arrested for attempting to sell the US Senate seat left vacant by president-elect Barack Obama. Curiously, the arrest came less than 24 hours after Blagojevich ordered state agencies not to do business with Bank of America any longer. Of course, this may answer the question of why other states waited so long to investigate Countrywide until after it had collapsed and been eaten up by a larger lender.
Thus, it may be wishful thinking to expect that homeowners who have lost a home to foreclosure can find any real justice with regulatory agencies. The most they can probably hope for is that the agencies allow other potential customers of these companies to search for previous complaints and determine which lenders to stay away from. In any case, however, homeowners who believe they were unfairly taken advantage of should pursue filing complaints in order to warn regulators of predatory activity and alert other borrowers to problems with mortgage companies.
Homeowners also need to know which regulatory agencies they should contact for particular types of banks. The following list should be referred to as a rough guide and will cover most, if not all, of the types of lending institutions the typical borrower will have any kind of mortgage transaction with, as well as which agency to submit a complaint to, if the need arises.
- National Bank: Office of the Comptroller of the Currency
- Federally Insured Savings and Loan: Office of Thrift Supervision
- Federal Savings Bank: Office of Thrift Supervision
- State-Chartered Savings Institution, Federally Insured: Office of Thrift Supervision
- Federal Credit Union: National Credit Union Administration
- State-Chartered Credit Union, Federally Insured: State Credit Union Agency, Federal Trade Commission
- State-Chartered Credit Union, not Federally Insured: State Credit Union Agency, Federal Trade Commission
- State-Chartered Bank or Savings Institution, Not Federally Insured: State Banking Agency, Federal Trade Commission
- State-Chartered Bank, Not Member of Federal Reserve System, Federally Insured: State Banking Agency, Federal Deposit Insurance Commission
- State-Charted Bank, Member of Federal Reserve System: State Banking Agency, Federal Reserve Board
Any type of lender that is not on the above list and that homeowners want to submit a complaint about should contact the appropriate state agency. If one is not available, the state attorney general or state banking department should be contacted. In fact, the state attorney general can be sent a copy of the complaint for any of the above-listed lending institutions, as the states do have the right to investigate banks or mortgage companies doing business in their territories.
Again, homeowners who have lost a house to foreclosure may be disappointed if they believe any regulatory agency will come to their rescue, put the lender out of business, and give them their home back. This will not happen. But borrowers who feel they were taken advantage of may wish to keep a record of their complaint with the appropriate agency; after all, when enough people complain about a company, there will be no other option than to investigate it and shut it down.