Servicing Fraud | Cease and Desist Orders as Regulatory Theater in Mortgage Settlement Negotiations

Naked Capitalism – Cease and Desist Orders as Regulatory Theater in Mortgage Settlement Negotiations

I must confess to being puzzled last week by an American Banker article that claimed that Federal banking regulators were looking to send out cease and desist letters to serviers as a way to light a fire under banks who were dragging their feet at the now somewhat infamous so called settlement negotiations among 50 state attorneys general, various Federal regulators, the Department of Justice, and the major banks/servicers.

Now on the surface, this sounds sensible. The banks are not cooperating, so pull out a big gun and if needed, use it on them. But American Banker provided a link to the form of the cease and desist order and it looks remarkably weak. Its requirements are far less demanding than those set forth in the famed 27 page settlement draft that was presented by the AGs and the Federal authorities to the banks.

It’s important to stress that a threat of action that is weaker than what you are demanding in a settlement makes no sense in a negotiating context. It’s like offering to settle a lawsuit for $500,000 when the case only asks for $250,000 in damages. No one would accept the settlement, they’d either fight in court or accept a default judgment.

Now some of my correspondents were of the view that a cease and desist order was a serious matter, so this might create a frisson in the press if this comes to pass. But this is simply not a very serious cease and desist order. Adam Levitin, who replied by e-mail and then amplified his view in a post, confirmed my instincts:

You can check out the rest here…



Servicing Fraud Cease & Desist Orders from Regulators

7 Responses to “Servicing Fraud | Cease and Desist Orders as Regulatory Theater in Mortgage Settlement Negotiations”
  1. tonycat says:

    Even if principal is written down, if not eliminated altogether it is unfair to the homeowners. How are they going to deal with the clouded title problem? Should anyone be asked to pay any more money for a fraudulent loan, a pretender lender made loan, to begin with? Are we going to change property law to help the good-ole-boys cover their frauds? In law, the top man in a corporation is the top employer. Let him answer to the crime, file criminal charges. I guarantee if the powers that be DO this, the lower ones on the ladder will be afraid to continue to perpetrate the fraud. It will send a message. All ill-gotten gains by the banksters should have to be returned to the homeowners.

  2. Mrs Doutfire says:

    We the people need to come up with our own idea and offer it to the banksters…..
    My personal thoughts are to take all the loans that were sold on wall street and any and all money we have put to our loans, use to principle. anything left over be allowed to mod the rest at the banks intrest rate that they pay back to the goverment on a bailout loan….I think its like 0.05%? for the remainder of the loan. For those who already lost there homes, banks should have to either give it back or returne the money those folks gave in full and allow them to get another home and loan them the rest again at the banks intrest fed rate thats the lowest. We do owe someone people. Just a thought……

  3. fighting mad, mad as hell says:


  4. fighting mad, mad as hell says:


  5. l vent says:

    THEY ARE ALL SUCH A BUNCH OF TRICKSTERS. It kinda looks like the clean-up crew who came to cover-up the scene of the crimes are now saying,” Damn it, we are running out of ideas, the people know too much”. Quick, let’s hide some of these perps and play a little game of cat and mouse here with the homeowner’s before they begin to organize and mob us with pitchforks or worse yet, lynch us in the town squares across America. Too late, THE JIG IS UP, WE THE PEOPLE DEMAND FULL RESCISSION OF OUR FRAUDULENTLY INDUCED LOANS, GIVE THE STOLEN HOMES AND STOLEN WEALTH BACK TO THE PEOPLE OR WE WILL SUE UNTIL JUSTICE IS SERVED FOR THE INNOCENT VICTIMS OF FORECLOSUREGATE, WHO ARE THE HOMEOWNERS.. THIS IS OUR COUNTRY AND THESE ARE OUR HOMES. GOD BLESS AMERICA!!!

    • lucinda says:

      i hope all the att,mortgage servicers,and banks go under for there part in this mess they made,something has to be done,closeing them down is the only way to stop them,no other things have worked,if they continue to do buissness this fraud will never go away,it been going on to long,more peaple will lose there homes,are money is gone they took it illagally thourth fraud and forgery,put them in jail where they belong for gods sake!!!

  6. lucinda says:

    who are the banks and mortgage servicers,for cesie and deciest orders for?

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