Report: Banks Force Distressed Homeowners to Waive Right

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foreclosed propertyAs the federal government wades deeper into claims of improper foreclosure procedures at the nation's largest banks, a new scandal is emerging.

An investigative series by ProPublica has revealed that several lenders are forcing distressed homeowners to sign away their rights to sue in exchange for a temporary loan modification -- often without any guarantee that the bank will not foreclose on the property later.

While the practice has been banned outright by the government's loan modification program, HAMP, lenders are finding loopholes in temporary arrangements known as forbearance agreements that continue to paint struggling homeowners into a corner. Essentially, these arrangements force homeowners to give up their right to fight foreclosure, even though the bank could decide to pursue foreclosure after the forbearance period ends.

Visit ProPublica for the full investigative report.

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