Pending Foreclosure Fraud Settlement Achieves New Level of Abject Regulatory Failure

Ponzi Settle

Pending Foreclosure Fraud Settlement Achieves New Level of Abject Regulatory Failure

After too many years to count of regulatory failure and limp-wristed reforms, it’s hard to be surprised. Nevertheless, I hope to convince you that a yet another mortgage settlement, leaked on New Year’s Eve when hopefully no one would notice, achieves the difficult task of reaching a new level of dereliction of duty.

This latest bank gimmie comes in the retrading of consent orders that were entered into in April 2011. Readers who followed the mortgage beat closely may recall that the OCC broke with other banking regulators, the DoJ, and HUD in entering into its own consent decrees in the hope of undermining the mortgage negotiations. But this OCC settlement (which the Fed joined) was in some ways broader that the one entered into by 49 state attorneys general and various Federal agencies in early 2012, in that it involved the 14 major servicers, while the later state/Federal deal was limited to the biggest five. The banks piously promised to shape up, and were required to conduct reviews of foreclosures performed in a specified time frame if consumers asked for them, plus conduct a review of a sample of other foreclosures.

Now a number of observers, including yours truly, called out these settlements as patently ridiculous and rife for abuse Why? Rather than act like a proper regulator, and oversee the review process itself, the OCC outsourced it to consultants hired by the banks! Yes, the OCC would get to review them for conflicts of interest, but who are we kidding? And it was even worse than you can imagine, since the OCC accepted that conflicts would be the norm.

Rest here…



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