Blast From Past-Indepedent Foreclosure Review

Posted by kevin on October 11, 2014 under Foreclosure Blog | Comments are off for this article

I recently conducted a review of a borrower file to determine whether there were any defenses to a pending foreclosure action which at the final judgment stage. I noted that the homeowner received $600 from the Independent Foreclosure Review.

Brought back memories, so I searched my notes about this so-called review. Kudos to Naked Capitalism blog where I got most of my anecdotal information. Also, a nod to Prof Levitin from Georgetown The following is a piecing together of my notes:

The banks had agreed to hire the reviewers, pay them, coordinate their efforts, all presumably within the oversight of the Office of the Comptroller of the Currency (OCC). Then after a year and a half of spending $1.5 billion on this program of which little or nothing went to the homeowner victims of the banks’ foreclosure abuses, the banks persuaded the OCC that the reviews were not worthwhile.

2 Points.

1. Back in October 2011 as the Independent Foreclosure Reviews beginning, Georgetown Law Professor Adam Levitin wrote a long blog he called “Robosigning 2.0: Mortgage Foreclosure File Reviewers.” In it he reviewed and criticized a bank’s temp agency’s help-wanted ad for the reviewers. His main conclusions:

“I have seldom seen a document that says more about the… malarkey that the OCC and Fed are trying to pass off to cover for the banks than this job ad. I think it demolishes even the thin fiction that the OCC/Fed servicing consent orders are anything more than [fake] Potemkin villages. Instead, what we have here is nothing less than a federally-blessed Robosigning 2.0.”
“Bottom line here–it’s hard to take the OCC/Fed consent orders seriously when all they mean is that a marginally more skilled employee is reviewing the robosigners’ original work….”

2. Regretfully, what then actually happened as the banks proceeded to hire and work with these reviewers appears to be much worse even than Prof. Levitin anticipated. One former reviewer wrote a very long comment describing in great detail how the bank where was hired to conduct these reviews actively suppressed his and other reviewers’ efforts to find foreclosure errors and abuses, and to locate and compensate homeowners. Here are samples of what he wrote:

“We were supposedly independent contractors, but we worked directly under bank and lenders authority and supervision. Any findings we made were quality controlled by the bank. Any findings we made came directly under the scrutiny of the bank. Any arguments over our findings, and whether they should be changed or not could and often did result in termination from the program (meaning the reviewers got fired) without cause or warning and we had no recourse because we were contractors.”
“Other issues began to come up…The situation was becoming heated as Claim Reviewers (as we were called) began finding more and more issues of law, not to mention, incompetence, and immorality and poor judgment…[T]here were tensions building between Claim Reviewers and bank managers as the list of harm on borrowers grew. However, the bank and the OCC did find a solution. Take the questions out of the tests we were doing that asked about issues of law. So one test that had 2200 investigative questions (there are about a dozen tests for a file review) now became about 550 questions. Issues of law were removed.”
“At another of our group meetings we were told that if a borrower did not specifically cite the law or statute that was violated in their complaint that we were not to address a violation of law found in the file as it was now irrelevant to the issues at hand… The problem was that usually a borrower only had a feeling they got shafted somehow, but did not specifically know how. The complaint form also didn’t mention to the borrower that they had to be specific about issues of law. The form only asked generic questions about what happened. Now it was very evident that we were there as window dressing and not the compassionate heroes we thought we were.”

The problem was that the banks sold the OCC on the idea that the audits would vindicate the banks; however, as the reviewers got more into their work, they discovered that the opposite was true. At that point, the banks complained that the costs of the audits was prohibitive, and before you know it, the audits stopped. Many of my clients got checks with some sort of vague explanation of why. A joke.

Banks play with borrowers. Heck, they play with the Feds!

Posted by kevin on December 26, 2012 under Foreclosure Blog | Comments are off for this article

In the last blog, we focused on mortgage modifications and pointed out that lenders (or more probably servicers) can be less than straightforward in their dealings with borrowers or their representatives. Well, the lenders do not just jerk around the little guys; they do it across the board.

In conjunction with the AG/DOJ investigation of the mortgage industry’s servicing operations which led to the $25B settlement, the Office of Inspector General investigated servicer operations at the 5 “Too Big to Fail” Banks for the time period October 1, 2008 to September 30, 2010. The OIG report documented questionable practices used by servicers including employing foreclosure “mills” and “robosigning” sworn documents in thousands of cases.

What the reports also stated was that all five of the lenders (BOA, WF, JPM-Chase, Citi and Ally) hampered the investigation of the OIG. At Ally, the bank’s attorneys refused to allow OIG investigators to interview responsible personnel. Ally failed to produce documents in a timely manner, and when it did, Ally provided incomplete information. WF intially refused to produce 9 persons for questioning, but relented on the condition that WF management and attorneys attend the interview as facilitators.

Chase management provided explanation statements to bolster shaky testimony of employees and limited access to verifying documents. BOA attorneys refused to allow employees to answer certain questions posed by OIG, conferred with employees before they answered a question (presumably during the hearing) and did not turn over requested documents.

In addition to the stonewalling, the OIG report indicated (what everyone in NJ knows) that foreclosure law firms working for the servicers improperly prepared and signed documents.

So, if you are trying to get a modification in Bergen County and have been danced around the floor by your servicer who has led you to believe that it is your lender, just remember- the big banks have done and continue to play games with federal and state regulators. In NJ, until the distinguished judges put their foot down, the people and the judicial system both will continue to suffer at the hands of the lenders.