It has now been six months since the announcement of the foreclosure fraud settlement between multiple federal agencies, the state Attorneys General and the five leading banks. It has also been six months since the establishment of the RMBS working group, the task force inside the larger financial fraud unit at the Justice Department, which is supposed to be ferreting out fraud among the major banks in the securitization phase of the housing bubble. New York Attorney General Eric Schneiderman famously said that if nothing happened in the task force within six months, he would walk away in very loud fashion. I think it’s fair to say that nothing has happened. There has been no announcement of additional subpoenas since the first days of the working group. It took four months to get a coordinating director for the investigations. And basically, everything has gone silent.
So here’s how Schneiderman celebrated that six-month anniversary, last night on Capital Tonight in New York:
Schneiderman said he has a personal stake in the contest between Obama and Mitt Romney, predicting that the national mortgage fraud investigations he is continuing to pursue at the national level after being tapped by Obama to serve as one of five co-chairs on a Justice Department task force would come to a rapid halt if the GOP takes control of the White House.
“I will attend the convention,” the AG told me during a CapTon interview last night. “I want to join the crew enthusiastically supporting our president for re-election.”
“I assure you that if President Obama is not re-elected that support for the kinds of investigations of corruption in financial services or problems in the mortgage market probably will die down pretty quickly. I don’t think President Romney is that interested in going after his colleagues in finance and financial manipulation in particular.”
The investigations would die down pretty quickly, ay? So what we have now represents NOT coming dying down pretty quickly? You could have fooled me.
Incidentally, the settlement has done absolutely nothing to modify servicer behavior. The exact same problems crop up, because servicers have no reason or capacity to change. They didn’t suffer very much for their misconduct, after all.
Despite the approach of an early-October deadline by which servicers must fully comply with the new standards, those who defend and process foreclosure cases say little improvement has emerged.
“We’re not seeing any changes in servicer behavior,” says Megan Faux, director of the foreclosure prevention project at South Brooklyn Legal Services, a legal aid firm that represents poor people confronting foreclosure in New York City. “We’re still seeing huge delays, improper denials of modification, very few principal reductions. None of their practices are really changing.”
For Schneiderman to have the nerve to claim that everything will fall apart on the settlement and the task force based on who becomes President, when things are doing a pretty good job of falling apart on their own, is pretty crass.