NY Times: Proposed Settlements on Foreclosure Worsen Situation

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SCAM CONTINUES: EVERYONE KNOWS BUT NOTHING IS DONE

EDITOR’S NOTE: The fear that the sky will fall prevents “responsible” journalists and government officials from using the f-word, so I will. This was a fraud from start to finish and anything short of reversing it is ignoring established law, decency and common sense. The foreclosure methods employed were fraudulent because the entire scheme was a PONZI-like scam. The mortgages and notes are invalid and unenforceable, the liability has been paid, and any home taken in foreclosure — past, present or future — is an extortion payment to the financial industry that has already been paid several times over.

Editorial

Wrongful Foreclosures

Published: April 16, 2011

It turns out that the inquiry that preceded the agreements was limited to reviews of “foreclosure-processing functions” — things like paperwork handling and work-force supervision. The reviews found big processing problems — no surprise there — and the agreements call for more staff and better management.

What was not looked for is far more significant. Because so few files were examined, the regulators’ report says, “the reviews could not provide a reliable estimate of the number of foreclosures that should not have proceeded.” So much for the burning question of the extent of wrongful foreclosures. The reviews also did not look at potential abuses outside the foreclosure process, including unreasonable loan fees and misapplied loan payments. Such faulty charges can precipitate default by making it impossible for borrowers to catch up on late payments.

Nor did the reviews focus on faulty loan-modification processes, like instances in which bank employees wrongly told borrowers they needed to be delinquent to qualify for new loan terms. Delinquency subjects borrowers to late fees, damaged credit and an increased risk of falling hopelessly behind. It also harms mortgage investors who are stuck with the loan losses. But it can be profitable for banks that service loans; they can extract late fees from the borrower or upon the foreclosed home’s sale.

To add insult to injury, the agreements leave it largely up to the banks to investigate themselves on those issues. They require banks to choose, hire and pay independent consultants to check a sample of pending foreclosures; banks are then supposed to reimburse wronged borrowers. The regulators pledge to ensure that the reviews are comprehensive and reliable. We’re not holding our breath.

The agreements do not include monetary penalties, though regulators say fines are coming. Regulators appear divided over whether the agreements should preclude efforts by the states to correct and punish foreclosure abuses. The Federal Reserve and the Federal Deposit Insurance Corporation have stated clearly that the agreements do not stop other enforcement actions. The Office of the Comptroller of the Currency has not ruled out such interference. Over all, an important opportunity has been missed for real reform, redress and accountability.

Tags: creditor, disclosure, foreclosure, foreclosure defense, foreclosure offense, fraud, mortgage meltdown
Posted in bubble, Corruption, Eviction |