Michael Barr, who is leaving the Treasury Department, made a few calls to the financial press in recent days (still waiting by the phone, sigh) to update them on the government regulator’s efforts in combating foreclosure fraud. He spoke with Felix Salmon and focused on an “11-agency, 8-week review of servicer practices, with hundreds of investigators crawling all over the banks.”:
That information is finding its way to the state attorneys general, in their review. Meanwhile, said Barr, an alphabet soup of regulators (OTS, OCC, FDIC) is looking at various financial services companies (MERS, along with lots of different servicers, trustees, and banks); HUD is holding everybody to FHA and HAMP guidelines; and the FTC is looking at non-bank lenders. And keeping everything coordinated is the new Financial Fraud Enforcement Task Force which has been put together under the leadership of Justice’s Tom Perrelli.
“Why are we investing these resources and including Tom Perelli in the discussions?” asked Barr. “We’re holding the banks accountable to fix it.” I asked him whether he thought that was even possible. “Their conduct suggests they can’t,” he said, adding that “they can be held accountable for not following the law. HUD can assess significant fines on them.”
The banks are simply not likely to self-correct. Their financial incentives run entirely the wrong way – servicers make money on foreclosures and don’t think they’ll be held to account for faking documents. I’m glad that this investigation, whatever it is, will share information with the 50 state AGs, but let’s keep in mind, Treasury has “held accountable” the servicers for clear violations of the guidelines in HAMP by not imposing one sanction or financial levy on them. And past history suggests that, if the problem is wide enough to present a systemic risk, the likelihood that Treasury moves heaven and earth to shovel the banks money instead of unwinding the largest firms goes way up. I don’t know how they can get that accomplished with a Congress which simply won’t go near bailouts anymore, but nothing in this review process makes me believe that Treasury’s prime directive has shifted away from “protect the banks.”
Salmon did get Barr to say “You should hold us to whether things get better or worse. If a year from now nothing has changed, that would be a reasonable criticism.” I’m sure I can find someone to make it. Yves Smith, for example.
But how many mortgage mod programs have the Bush and Obama administrations put into place, which each time led to embarrassingly inadequate results? Here, one can easily imagine more fundamental change might be warranted. Yet in the blogger meeting with Treasury last August, when pressed about the lousy results of HAMP, Geithner took pains to point out that Treasury had little authority over servicers. So how, pray tell, can they force changes in behavior? [...]
Get a load of this comment via Felix from Barr:
“Barr told me that they’re doing file reviews which take between five and eight hours to go through a single loan file: this is hard, detailed work, and at the end of it all there will be a real understanding of what needs to be done—something necessary, if not sufficient, to finally resolve this mess.”
Securitization professionals tell me that someone who was competent would not be capable of spending five, much the less eight hours on a loan file. This is proof that they are so clueless that they don’t have the foggiest idea of what is germane.
This all fits seamlessly with what Barr told the Financial Stability Oversight Council for 15 whole minutes yesterday, that they’re working diligently to uncover basic problems in the foreclosure process and “hold the banks accountable to fix it.” The foreclosure task force may, or may not, actually uncover the information needed to describe the depth of the problem. But whether they use that information is unlikely, and whether they focus on actually punishing banks for committing fraud or just hoping they fix it going forward seems like a question easily answered.





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Request for Congressional Foreclosure Panel to Examine Foreclosure Lawyers
http://www.change.org/petitions/view/request_for_congressional_foreclosure_panel_to_examine_foreclosure_lawyers#
“Although increasing numbers of courts are continuing to reject improper and fraudulent foreclosures, the Congressional Foreclosure Panel examination of mortgage services and foreclosure practices did not include foreclosure lawyers.
Lawyers are officers of the court; knowledge of applicable laws and civil procedure is not required from mortgage lenders. In states that require judicial foreclosures, lawyers are the ones who file lawsuits to seize and sell property; and lawyers are responsible for filing and recording foreclosure property deeds.
An investigation could prove helpful to sorting out whether improper and illegal foreclosure proceedings are linked to any self-dealing conduct disadvantaging lenders, investors, homeowners, and city governments. . .”
http://www.change.org/petitions/view/request_for_congressional_foreclosure_panel_to_examine_foreclosure_lawyers#
Kabuki for the groundlings. Nothing is intended to affect the MOU.
There’s a difference between the procedural steps chosen by lawyers to enforce a lien on real property and the systemic abuse of the American real estate recording and lending systems as practiced by the major banks the past ten years or so. Lawyers also rely on statements of fact by their clients, unless abundantly untrue.
Any word on what Barr is going to do for work now?
according to emptywheel the idea is teaching
I was hoping it wasn’t to work for a mega bank.
Shelia Bair’s statement from Tuesday of this week was a bit sugar-coated, I thought. Nothing about mark-to-market, which would obviously prove the insolvency of the Biggies.
Calculated Risk publishes an unofficial list of troubled banks just about every week. Always makes for interesting reading.
Hey Shelia: Mark-to-Market. Hello? How about receivership? So?
I’d tried to keep an open mind, but after reading this, plus Yves, I can only conclude that Barr is in LaLa Land.
I am so behind on this scandal. Probably you know about Steve Eisman. From two years ago,
Banksters lobby and finance decision makers. The homeowners will be kicked out. Then investors will come in on the last housing down leg and pick up bargains. That is how it was always planned around cognac and cigars.
It is now a Corporate Oligarchy they have the ring of power and they will do what is most profitable for them. Morals and right/wrong or ethics have nothing to do with it. Rangel was out of line.
“Get in line and keep moving.” Happy Thanks Giving
So what will a ‘Whitewash MERS fraudulent mortgages’ bill look like? Will we know it when we see it, or will it float on by us? It’s got to be soon, doesn’t it? During the Lame Duck?
If Blanche Lincoln was the President, even she would be more pro consumer.
“Securitization professionals tell me that someone who was competent would not be capable of spending five, much the less eight hours on a loan file.”
As a prior mortgage professional with over 10 years experience in both the retail and wholesale arms of the business, I can tell you that a competent mortgage professional can look at a loan file and tell you in 5 minutes if anything is wrong with it. The 8 hours is an absolute joke, or a lie. These files for the most part contain the same documents, in the same order. It might take a little longer to compare all of the numbers and dates, say 15 minutes. An underwriter (the individual who approves the loan) spends generally about 30 minutes on a complete loan file and that is looking at it in depth.
Anyone compete would kick these out instantly as not the title holder.