Friday, February 15, 2013

Obama Administration Asks Banks to Regulate Their Own Foreclosure Abuses

By Noel Brinkerhoff, David Wallechinsky
Having bungled the so-called independent review of foreclosure mistakes, the Obama administration has now decided that the best way to help homeowners is to have the banks—which were responsible for the foreclosure errors—examine the case files and decide how best to fix the situation.

In January, the Office of the Comptroller of the Currency (OCC) shut down the foreclosure review by independent consultants—which had already cost about $2 billion— after it was revealed that the banks had selected said consultants. The process also proved to be taking too long to resolve homeowner grievances, so the administration decided to reach a $3.6 billion settlement with the banks.

But before the money can be distributed to individuals wronged during the foreclosure crisis, more than four million cases need to be reviewed. Instead of federal regulators doing the work, they are trusting the financial institutions, including Bank of America and Wells Fargo, to do it properly this time.

Housing advocates, not surprisingly, are worried the banks will shortchange homeowners while they scrutinize their earlier mistakes. “The whole process has been a slap in the face to homeowners and a slap on the wrist to banks,” Isaac Simon Hodes, an organizer with Massachusetts-based Lynn United for Change, told The New York Times. “The latest development shows how there has been no accountability.”

Thursday, February 14, 2013

Occupy Fights Foreclosures Speaks Out on State of The Union and the Republican Response, a Failure to American Families by Both Parties on the Ongoing Foreclosure Disaster

State of the Union by President Obama to the joint session of the United States Congress and the Republican response to the State of the Union address

Obama stated in his State of the Union address: “It is our unfinished task to restore the basic bargain that built this country – the idea that if you work hard and meet your responsibilities,you can get ahead, no matter where you come from, what you look like, or who you love.” Yet millions of American families are suffering from the inequitable injustice of predatory loans and fraudulent foreclosures that is still not being addressed.

Los Angeles - February 13, 2013 - As expected, in the State of the Union address by President Obama and the Republican response by Senator Rubio, both parties failed to address the American people on the ongoing foreclosure crisis.
As a candidate before his first term, President Obama said, "If we don't act swiftly on the foreclosure crisis there will be chaos." Years after this crisis, IT IS STILL CHAOS! Very little has been done to help homeowners. And millions of victims have lost their homes while millions more are facing foreclosure this year. But President Obama has said very little. As a matter of fact the little he did say was a "white-washed" version of the real housing crisis: "Our housing market is healing, our stock market is rebounding, and consumers, patients, and homeowners enjoy stronger protections than ever before."
Yet, after multiple investigations by many agencies on the housing/foreclosure fiasco and with all the evidence of major fraud and abuses by Wall Street, we still have the same response by the government: "Banks too big to fail--Bankers too big to go to jail." In fact, the same banks that committed financial terrorism against millions of American families have received protection by prosecutors, courts, regulators and both political parties. After years into this crisis and with millions of victims, there is still not one banker that has gone to jail for the "crime of the century."
It is time to recognize the crimes foisted upon American families. As our president talks about making it safer for our children, by implementing gun control, there are many more children suffering through the trauma of watching their family lose their home to fraudulent foreclosures.
While President Obama found the courage to stand up to the gun lobby with his new proposals to curtail gun violence, there has been no sigh that his administration is willing to buck the equally entrenched bank lobby or to defend its even more numerous victims, says OFF's Carlos Marroquin.
"I have been victimized by both guns and banks," says Columbine High massacre survivor Richard Castaldo, who took 8 bullets in the 1999 high school shootout and now faces foreclosure on the Hollywood condo he was buying with the help of settlement proceeds. "It might sound like apples and oranges," Castaldo adds, "and it'll be great if we can keep guns out of the hands of a maniac. But I have to say there's also serious victims of guys wielding foreclosure papers -- and we also need to get them under control. Fact is, that can be life-threatening too. I've met 90-some-year-old ladies facing being thrown out on the street. You can't say their lives aren't at risk, And usually," Richard adds, "they are just as innocent as the random victims of gun nuts."
Senator Rubio, who gave the Republican response, also continued to bury his head in the sand with regard to the housing issue. The Republican Party has been opposed to doing anything about the crisis--especially in regard to implementing regulations. Their party leaders have said that we should let the market fix itself. Florida, Senator Rubio’s home state, has been one hardest hit in the U.S. and will continue to suffer while he fights against regulations for the criminals, leading us to believe that he, like many politicians, has ceased to work for the people he represents. "And the truth is every problem can’t be solved by government. Many are caused by the moral breakdown in our society. And the answers to those challenges lie primarily in our families and our faiths, not our politicians", said Senator Rubio.
We at Occupy Fights Foreclosures will continue to stand for the American homeowners and we will continue to seek justice for families in danger of losing their homes, until we are recognized and heard. “While President Obama found the courage to stand up to the gun lobby with his new proposals to curtail gun violence, there has been no evidence that his administration is willing to buck the equally entrenched bank lobby or to defend its even more numerous victims,” says OFF's Carlos Marroquin.

Wednesday, February 6, 2013

Foreclosure Settlements, Senator Warren Thinks the Public Has a Right To Know What They Found

By David Dayen

To help settle a probe into illegal mortgage practices, servicers were ordered to review all foreclosures between 2009 and 2010. The senator from Massachusetts thinks the public has a right to know what they found.

Since the start of the new Congress, liberal Democrats have anxiously awaited senior Senator from Massachusetts Elizabeth Warren’s initial moves. Celebrity entrants into the Senate—from Hillary Clinton to Al Franken—have tended to take a modest approach, immersing themselves in committee work and issues of local importance, building relationships with their colleagues, and operating as a “workhorse, not a show horse.” By contrast, Warren said during the campaign that she wanted to use her new position as a platform for her ideas. And one of her first actions suggests she will spend her time as Senator much the way she did as chair of the TARP oversight panel and at the Consumer Financial Protection Bureau: shedding light on the harm caused by unscrupulous financial interests. (Editor's note: Warren's daughter, Amelia Warren Tyagi, is a member of the Prospect's governing board).

Last Thursday, Warren teamed with the Democratic ranking member of the House Oversight Committee, Elijah Cummings, to launch an investigation into the Independent Foreclosure Reviews. Almost two years ago, the Office of the Comptroller of the Currency (OCC) and the Federal Reserve ordered the reviews to help settle a probe into illegal mortgage practices that shortchanged homeowners and, in some cases, improperly kicked people out of their homes. Under the order, 14 of the biggest mortgage servicers had to give all borrowers who received a foreclosure notice in 2009 and 2010 the opportunity to have a neutral third party look at their files to see if the servicer had made errors. Borrowers would then be entitled to compensation for the mistakes. Of the 3.8 million eligible borrowers, around 500,000 submitted requests for review.

But the independent reviews turned out to be neither independent nor reviews. As whistleblowers have pointed out, the banks handpicked and paid the salaries of the reviewers, third-party consultants who have increasingly become a substitute for government bank examiners. The data from the borrower files, as well as the guidelines for review, all came from the banks, and in many cases the banks made the determinations of harm themselves, leaving the reviewers to merely check their work. Managers overseeing the consultants overlooked entire categories of borrower harm, even obvious ones like servicers rejecting loan-modification payments from a borrower with a signed agreement, or tallying up impermissible fees. The managers also steered the ground-level reviewers, most of whom were temporary employees with little or no expertise in mortgages or foreclosures, away from reporting significant mistakes. Banks could even appeal whatever errors did get through (borrowers, of course, could not). Meanwhile, the complex rules for scrutinizing the documents extended the time it took to examine each loan file, which was good news for the consultants who raked in well over $1 billion at last count.

The new OCC leadership, which inherited this debacle, put a stop to the reviews and instead said it would compensate homeowners with a cash settlement. The 3.8 million foreclosure victims from 2009 and 2010 would split $3.3 billion, which amounts to less than $1,000 per foreclosure. No effort would be made to use the data gained from the reviews in parceling out the funds; an as-yet-unknown process, determined largely by the servicers, will dole out a fixed amount to borrowers whose loans fit certain general characteristics. Another $5.2 billion would go toward reducing loan balances for borrowers still in their homes. OCC head Thomas Curry claimed that the review process became too costly, diverting money from homeowners to the consulting firms, and that the new settlement would provide the best way to get the most compensation in the hands of foreclosure victims quickly.

Warren’s belief in the power of transparency—which in this case means releasing public data whose collection the government mandated—to improve public policy has been a driving force even before she reached the Senate.
Enter Senator Warren. She and Representative Cummings have asked OCC and the Federal Reserve for all performance reviews the two agencies conducted during the program before nixing it; the amount of money the banks paid their third-party reviewers; and the total number of reviews, along with the percentages of those in which errors were found. “Public confidence in the banking system has been badly undermined by a widespread concern that large financial institutions are not held fully to account when they break the rules—and that consumers are not sufficiently compensated,” Warren and Cummings wrote in their letter to the OCC and the Fed last week. “It is critical that the OCC and the Federal Reserve disclose additional information about the scope of the harms found to establish confidence in the sufficiency and integrity of the settlement.” Warren’s belief in the power of transparency—which in this case means releasing public data whose collection the government mandated—to improve public policy has been a driving force even before she reached the Senate. For example, the CFPB Consumer Response Center—an initiative Warren championed when standing up the agency—makes available data from the organization’s complaint hotline about consumer-credit abuses and is an integral part of the supervision process.

While the information in the Independent Foreclosure Reviews may be flawed, it’s critical to know what was gathered. Too often in post-financial-crisis settlements with Wall Street banks, regulators settle on a remedy without determining or taking into account the level of harm. What’s more, without an accounting of the mortgage-servicer industry’s previous practices, it will be nearly impossible to fix the broken mortgage-servicer industry.

A thorough investigation of the entire failed review process would uncover much about the current system of bank regulation. It would expose the growing use of consultants; show the need for more funding so that regulators instead of consultants can conduct independent reviews; and highlight the need for additional standards and rules against the mortgage servicers, tailored to exactly what abuse they heaped on borrowers through 2009 and 2010. It could also put some much-needed focus on OCC, historically a light-touch bank regulator which has been embarrassed by this mess, to the extent that it’s overhauled its senior leadership. Right now the investigation is in its early stages—Warren is still getting her transition to the Senate in order. But there’s a lot under the surface, particularly the startling information from the whistleblowers, waiting to be uncovered. Combined with a forthcoming Government Accountability Office report on the reviews, which revealed a significant number of errors, policymakers and foreclosure victims could finally get the investigation of this industry that they deserve.

The request for the review data has let regulators and banks know that Warren will not be a silent, go-along-to-get-along Senator. There’s a certain value in just having a threat of congressional oversight, particularly from a high-profile figure who can stir public opinion. Cummings has worked on the foreclosure crisis for years, and House Financial Services Committee ranking Democrat Maxine Waters, who sent her own letter to OCC seeking more information, yesterday asked Republican chair Jeb Hensarling for hearings on the matter. But Warren, by virtue of her large following, can raise attention to the issue, which fits with a key principle of her nascent political career: whether government will bother to stand up when the middle class gets ripped off.

Posted by Carlos Marroquin

Carlos the mailman: Congressional Inquiry Into Foreclosure Review Is T...

Carlos the mailman: Congressional Inquiry Into Foreclosure Review Is T...: By Roy Hoppenheim So now some key members of Congress want a thorough review of the Independent Foreclosure Review process? ...