Despite Finding Big Problems in Mortgage Industry, Regulators’ Punishment Unclear
by Paul Kiel ProPublica, Feb. 17
Federal regulators say they’re going to crack down after finding “critical deficiencies [1]” with how banks and mortgage servicers have been handling struggling homeowners. But it’s an open question just what form a punishment will take, with one regulator reportedly pushing lighter penalties than the others.
In prepared testimony before Congress today [2], John Walsh, the head of the Office of the Comptroller of the Currency, which oversees the nation’s largest banks, said banks and servicers had violated state and federal laws, regulations and rules in rushing to foreclose on homeowners.
Banking regulators launched their review after the robo-signing scandal erupted, but it also includes how servicers have been handling homeowners’ loan modification applications.
In his testimony today, Walsh says regulators are in “in the process of finalizing actions that will incorporate appropriate remedial requirements and sanctions.” But just what that means isn’t clear.
Both The Wall Street Journal [3] and Huffington Post [4] reported this morning that the OCC wants to go easier on the banks than other regulators, specifically the FDIC. The OCC has proposed “relatively modest fines,” reports the Journal. It’s not clear what would be considered “modest” for a bank the size of Bank of America, the largest servicer, and one with a poor track record [5].
In his testimony Walsh said some servicers are worse than others, and the penalties will be tailored accordingly. It’s also unclear when regulators will decide what the punishments should be.
As we’ve reported, the administrations’ mortgage modification program has faltered in part because it relied on the banks’ voluntary participation [6]. Servicers violated the program’s rules with no consequences. The Treasury Department has said it’s powerless to punish servicers. But federal regulators like the Federal Reserve, OCC and FDIC have clear authority to punish banks for violating laws.
There are signs in Walsh’s testimony of the OCC’s more favorable views toward servicers. A review of about 2,800 homeowner foreclosure cases, he’s careful to say, found that servicers had indeed been “in contact with troubled borrowers and had considered loss mitigation alternatives, including loan modifications.” Only a “small number of foreclosure sales [1]” were illegitimate, he said. The people in foreclosure were actually delinquent.
What Walsh’s analysis misses is the possibility that homeowners fell behind because of their servicer’s errors [7]. For example, homeowners have been pushed into delinquency after the servicer wrongly told them that to be considered for a modification they should miss payments.
In recent months, OCC officials have defended their oversight of servicers in testimony before Congress. In December, the OCC’s chief counsel Julie Williams testified [8] that over the past several years, the OCC had issued “numerous ‘Matters Requiring Attention,’ requiring improvements in servicers’ loan modification operations and increased staffing.” A “Matter Requiring Attention” is essentially a stern letter from the regulator that can result in an enforcement action if the bank doesn’t fix the problem. The continued problems with servicers are evidence the OCC’s actions fell far short of what was needed.
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Comment: the touted wars of Titans – giant faceless entities – or alleged wars … will continue ‘almost’ reaching hypnotizing info-tainment levels.
Just as in George Orwell’s 1984, hypnotizing but masking the issues of impacts on individuals.
Suggestion: take it back to the desks of the original loan “officers.” Cite irregularities.
The people in foreclosure were actually delinquent.”??? We all should send this cartoon to Mr. Walsh that sold his soul to the Banks
Simple, MR. Walsh and the OCC is in the packets of the banks, The OCC works for the Banksters not for the people we all know that
John Walsh at OCC is a horse’s a**. “The people in foreclosure were actually delinquent.” … of course they were delinquent. But why? Maybe its because of the criminal behavior of the banks pushing the mortgages. Maybe it’s the economy tanked and incomes went down because of the criminal behavior of the banks.
Time to “walk like an Egyptian” against the collusion of our own government with the banksters. Mr. John Walsh, you should resign immediately.
IF WE DID WHAT THE BANKSTERS DID WE WOULD BE SENTENCED TO LIFE IN PRISON … AND THAT IS WHERE ALL OF THE BANKSTERS NEED TO GO.
Time to sring clean and exterminate all unwanted pest and rodents.
I second the motion, Pam. They all need to be eradicated like the vermin that they are. Totally evil thugs wearing Armani suits and living lavish lifestyles: all paid for off the backs of hard-working Americans.
This is just getting deeper and deeper and going nowhere. Seems to be a stall tactic to distract attention from the actual crimes that were found all along. To say ‘ regulators will decide what the punishment should be’…are these the same regulators who turned their heads years back when they saw fraud and let it continue? If so… who is to place a punishment on the regulators? They certainly did not do their job..yet they got good size paychecks for doing nothing. Same goes for the rest of the financial gang and the government. To spend time and plenty of money on committees and investigations is a farce. When nothing is done, such as indictments, then nothing has been accomplished but alot of paper stapled together saying what was found…same as we already knew.
Reason I feel committee hearings are a farce is the fact of the WaMu hearing that lasted over a year. And the results were plenty of fraud was found and they claim the CEO and others knew it. Big deal. Fraud..and they walked away. People are in prison on fraud of a much lesser degree. Is this justice? What am I missing here?
I have complained to the OCC for over a year about Wells Fargo, but everybody in bed with each other including the Dept of VA, but if the Government won’t apply the law, it is going to take real combat to get our properties back.
I know for a fact that Wells Fargo did not have legal rights to my home, and it clear that they did, however when you are dealing with regulators that don’t know how the process works it like talking to a 2yr old child. If there is but only one case that clearly show MERS’s RICO ations, its is my loan, where the fact is that MERS is not even license to do any kind of business in the State of Nebraska at ALL, and MERS even argued in front of the NE Supreme Court that they were not a “mortgage bank” which both they and the court agreed vs. NE Dept of Banking.
MERS has no interest in the properties financially and have as much right as the local bar to execute anything what so ever, is point in every case. How the Justice Dept allows this 44 employee place, that has never seen a original piece of any of the mortgage files, but are suppose to be a valid registration system is a bunch of BS. The recording are not even transmitted from the local register of deeds office to MERS, but from one party claiming to be owner to a debt.
bull bull bull from mr. walsh
he has been stonewalling our complaints about emc chase for over a year. big deal a letter.
those banks and servicers laugh all the way to the trash can with that letter.
we have repeatedly filed complaints involving major violatios of law and ethics by servicers and banks and mr walsh has stonewalled them all. he has been requested to use his regulation 30 enforcement powers to shut down chase emc and he just does nothing. he is a in the pocket of the big banks and he does what they tell him to do. he should they pay his salary and that is a fact and I am not talking about taxes. the banks pay mr walsh directly from fees assessed against their assets on their books.
if there was ever a fox watching the chicken coup this is it.
REGULATION 30 cease and desist order from mr. walsh would shut down all of this fraud in thirty days.
or less.
we need to petition to congress to replace him and all the occ senior management and auditor senior management and reform this agency and its funding. no more direct payment of money to pay their OCC salaries from big national banks. same thing from FDIC.
we need enforcement and prosecution of these bad guys.
I’m for the petition please start one
you say to “petition congress” they are aiding and abetting this fraud.
Wall Street and the Banks are blaming Congress for creating this Mortgage Mess.
Who do you think owns Congress?-certainly not the people/voters as it should be.
Forget anything being done to help you, all the financial regulators and institutions are in bed together.
The only way to get what is fair is to get them in court and before a jury of your peers.
That scares them to death as most on the jury will be folks that have been screwed just as you are being screwed.
How those folks would like to be on a case and finally get the chance to hit back.
That is what the banks are really afraid of the American average Joe..
hi
My middle name is Joe.
pls see my post and I agree with you.
in my case I have now sued mr walsh and the occ for fraud via an administrative mortgage discrimination case before HUD. time to act people instead of writing in these blogs. I served pro se the SEC OF HUD and MR. Walsh. it seems they are very upset. HOORAH FOR THAT .
david black-please keep us posted on your case !
What date was your case filed ?
unfortunately my Mortgage specifies “non-jury trial”……..so I filed for “In Camera Inspection”.
Nothing about halting the fraudclosures? I think the American people will soon be moving on Washington. Communism is a proven failed business model and that is clearly the only thing that these politicians are advocating for.