Sunday, April 21, 2013 – 01:00 pm.
The situation surrounding the now highly-publicized Independent Foreclosure Review (IFR) heated to a boiling point this past week, when affected homeowners started receiving checks meant to help offset improper and illegal foreclosure practices leveled at them by banks.
The amount of press emerging on the issue is startling, especially after checks sent to borrowers on April 12 either bounced, or were refused for deposit by banks and credit unions.
People involved in the review process are talking, and what they are saying is outrageous.
Last February, the review process was abandoned by the Federal Reserve Board (FRB) and Office of the Controller of the Currency (OCC). The OCC is the federal regulator responsible for the program payouts. The reason the reviews were terminated? The cost to review had reached some $2 billion in payments to consultants, with only 100,000 loan files examined. The cash payout amount is only $3.6 billion of the $9.3 billion total settlement.
Here’s some of the alarming facts coming out of this process. To put it bluntly. What happened is criminal, and another rip-off.
- Consultants, who were hired by the very same banks that committed the violations, were paid $250 per hour to review loan files. Files where the affected homeowner will receive as little as a $300 cash payment.
- The same consultants, who found egregious mishandling of the foreclosure process, modification and other requests, were told to by the banks paying them to ignore what they were seeing inside the mortgage files, or else they would be fired.
- The number of mortgages affected (error rate) wasn’t a few percent as federal officials led the public to believe. But instead it was more like 20%.
- If the amount paid to consultants, was paid to affected homeowners, each settlement check would increase by $475.
This is what happens when regulators oversee financial institutions they ultimately want post-civil service employment from.
Here are links to several stories on the matter. The allegations and assertions they report speak for themselves. The comments from readers are even more interesting.
San Diego Free Press: Banks Wrongfully Foreclose: Get a Slap on the Wrist
USA Today: Foreclosure review debacle lines consultants’ pockets
Huffington Post: Foreclosure Settlement Checks Bounce In Latest Setback For Troubled Program
Wall Street Journal: Latest Black Eye for Foreclosure Review: Check Problems
CNNMoney: Warren grills bank regulators over bungled foreclosure review
Bloomberg: Review of Botched U.S. Foreclosures Beset by Missteps, GAO Says
eCreditDaily: Plot Thickens Over Mystery ‘Error Rates’ of Foreclosure Reviews
Bloomberg: Costly Consultant Work on Foreclosures Prompts Congress Scrutiny
LegalTimes.com: Williams & Connolly Sues Bank Regulator Over Foreclosure Review Information
ABCNews: The Government Agency That Should Fine Itself
The American Prospect: The Fed’s Foreclosure-Relief Fail
LAW 360: OCC, Fed Grilled On Use Of Independent Bank Consultants
FOX Business: Fed’s Yellen Expresses Regret Over Troubled Foreclosure-Review Process
LAW 360: GAO Rips Regulators Over Botched Foreclosure Review
American Banker: Yet More Problems Surface with the Foreclosure Settlement