Officials Warn That Foreclosure Probes May Prove Inadequate

Officials Warn That Foreclosure Probes May Prove Inadequate

by Marian Wang

Since flawed foreclosure practices by the nation’s biggest banks became last fall’s biggest scandal, federal bank regulators and the attorneys general of all 50 states launched simultaneous investigations. But there are an increasing number of warnings that neither of those efforts have addressed the full scope of the problem.

Most notably, Elizabeth Warren, a senior Obama administration advisor, warned about the ongoing probes in Congressional testimony last week: “I think there’s a real question about whether there’s been an adequate investigation.”

After news about fraudulent and missing mortgage documentation raised questions last fall about the legitimacy of foreclosure actions, all 50 states launched a joint investigation. A group of federal bank regulators launched a separate investigation. As we’d noted, some observers had low expectations for the federal investigation all along, especially given the involvement of the historically bank-friendly Office of the Comptroller of the Currency. But Warren herself had once expressed higher hopes for the effort led by the states: “Right now my money is on the attorneys general,” she’d told the L.A. Times last fall. Now nine months later, it seems she’s not so confident about either.

Here’s where things stand. Federal bank regulators in April ordered the banks to submit plans for fixing their foreclosure and mortgage servicing practices, and those plans were submitted last week. (Read our rundown explaining the order.) Some banks are still negotiating with regulators on how to conduct the required foreclosure reviews and which outside law firms will be allowed to assist. As the Wall Street Journal reported today, regulators have questioned the independence of some outside firms, some of which had previously done consulting work for the banks or defended them in foreclosure suits. No fines have yet been imposed on the banks.

And then there’s the ongoing investigation led by the state attorneys general—though its progress has long been unclear. From as far back as November, news organizations have been reporting that a settlement was near—only to have those reports be repeatedly shot down as rumors.

What is clear, as we’ve noted, is that the negotiations have been strained by dissent. Some states have hesitated to dig deeper, favoring instead a quick settlement, according to the Huffington Post:

Some of the attorneys general, who asked to remain anonymous, said the government should use whatever evidence it currently has to extract as much money as possible, and then move on. The states lack the resources to conduct a comprehensive investigation that could take many more months, if not years, they said.

Banks seem to favor a quick settlement as well. “I would do anything to get it done today,” J.P. Morgan Chase CEO Jamie Dimon told investors last week. “Fix it and move on.” (Dimon might be exaggerating a bit when he said he’d do anything—he’s said in the past that principal reductions, or reducing the total amount that borrowers owe, is “off the table.”)

In Florida, after Republican Attorney General Pam Bondi took office in January, the state forced out two investigators who had led efforts to uncover foreclosure fraud and produced a lengthy report detailing the problems. Former Assistant Attorney General Theresa Edwards told the Palm Beach Post that without warning or justification, she and a colleague were asked to resign in May, despite there being a tremendous amount of investigating still left to be done. One of the dismissed investigators said she had concerns that many misdeeds would go undiscovered amid settlement negotiations.

Meanwhile, a handful of states have sought more aggressive action and warned they may break away from the broader probe. New York’s attorney general Eric Schneiderman—who’s conducting a separate probe into Wall Street’s role in the housing crisis—has said he’ll oppose any “quick, cheap settlement” of the multi-state probe, telling Rochester’s Democrat and Chronicle last month that the probe lacked both documents and depositions. A spokesman for the Iowa Attorney General’s office pushed back on that claim, saying they have “more than adequate investigative material.”


11 Responses to “Officials Warn That Foreclosure Probes May Prove Inadequate”
  1. lvent says:

    Found a couple of good you tube videos with Judge Napolitano who is one of a few Fox news anchors I respect. The videos are entitled Resisting the State. and Peaceful Republic or Police State? The foreigners are stealing our freedom and we are being called out to take our country back from these treasonist politicians and their evil minions…

    • Readdocs says:

      This will not help the bank, it just kicks the can down the road for someone else to pick up.
      As more and more titles are added to those already broken, the resolution will be harder to
      come by. Thousands of properties will have permanent clouded titles because of the neglect
      in doing what is right and legal.

      • lvent says:

        The homeowners must bring quiet title suits. The deed was conveyed to us at Origination or not long after with title insurance that proves that conveyance to be true. If the “pretender lender” can’t prove they own the loan, or if there is fraud anywhere in the loan, that judge must give clear title back to the homeowner. Fraud anywhere in the contract by the “lender” kills their own contract. The ORIGINATION FRAUD is a good place to start looking for this case ending fatal flaw.

  2. I am sure the banks would like it done ASAP, that would be beneficial for them, since it would mean careless, inadequate investigations, and no jail for the banksters.

  3. Jeffrey Santleman says:

    The “indequacies” started about 10 or more years ago – and the “Officials” are sure as hell aware of it.
    Today’s obscenties of ripping people off, lying in court, TBTF, total indifference from elected officials, rising homelessness is no different than the plight of civilians in a war zone.

  4. lvent says:

    Sure Chase will do loan writedowns and principal reductions for some of the sheeple to keep on keepin on the Ponzi Scheme for their owners. Their owners are getting pissed they are losing money flow from the sheeple. Mr Dimon knows, a loan mod does not fix the Origination Fraud at the inception of the mortgage fraud Ponzi Scheme. Principle writedowns and loan mods are just an attempt to cover up for the Origination Fraud. Chase is actually committing more fraud by givng mods and write downs but WTF, why not? Not one of the Ponzi Scheme criminals have gone to prison yet so the cover up continues. What the owners of the Ponzi Scheme really wanted all along is a nation of renters but that is not going as planned. The elite bastards better not dare try it. .

  5. Ernie JC LaGuilles says:



    • lvent says:

      Aw, this is mild compared to the what we usually call the tyrant criminal PONZI SCHEME bastards.

    • Scotty Simpson says:

      If the Attorney new about fraud could he be held responsible in cIVIL sUIT?

      • Snowstorm says:

        Yes, The attorney’s can be held liable, for submitting fraudulent documents into Court. I am researching that even the Judge’s can be held liable “FRAUD UPON THE COURT” and ” FRAUD BY THE COURT”. If they don’t follow, their judicial duties, they can also be held liable. So , After we have all exhausted all our avenues, it will always be a ‘WRONGFUL FORECLOSURE, so file a COMPLAINT/LAWSUIT and name them all. Don’t give up!!!! REMEMBER, a few states have enacted the law that the ATTORNEY’S must CERTIFY that the documents are REAL with an AFFIDAVIT attached to the FORECLOSURE doc, so that’s it. HOW can they VERIFY and CERTIFY ????

      • Scotty Simpson says:

        An attorney firm out of OKC sent us a letter on May 5, 2011 and said we had 30 days to respon,
        we started on March 1, 2011, when we missed our first mortgage payment, weresponded to this letter on June 1, 2011 and on June 2, 2011 this law firm filed foreclosure suit in Kay County, Oklahoma they did not even wait the 30 days. Thats ok I will get them i have a MERS problem
        and took my mortgage paymenst we save and paid a bankruptcy attorney and woman that done a radio show on 4closurefraud to do a Forensic Securitization Audit for us. We are going to fight this corrupt system. We were just 91 days behind and was working with a Fannie Mae counselor to help us we had the money to ctach up. SunTrust Mortgagwe was so hateful, but now I know why they make more money to foreclose on us than to let us catch up.

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