Foreclosure Relief? Don’t Hold Your Breath
BUT Michael Olenick, a specialist in mortgage research, said he spotted a conflicted consultant after one hour of digging. Allonhill, a smallish firm appointed by Aurora Bank, a mortgage servicer, is headed by Sue Allon, whose previous small firm acted as credit risk manager in a 2003 mortgage pool for which Aurora oversaw the loans’ servicing. The prospectus on that deal noted that Murrayhill, Ms. Allon’s former firm, would “monitor and advise the servicers with respect to default management of the mortgage loans.” It also said that Murrayhill would make recommendations to the servicers regarding delinquent loans.
Now, under the comptroller office’s program, Ms. Allon’s firm may be analyzing the treatment of borrowers on whose loans it acted as credit risk manager. “This conflict is so deep and so obvious, how could anybody have missed it?” Mr. Olenick asked.
A representative for Ms. Allon wrote in an e-mail that Allonhill “focuses on a different area of the mortgage industry than Murrayhill did.” She said the foreclosure information Allonhill was reviewing for Aurora was “outside the scope of what was provided to Murrayhill.”
Aurora did not comment.
JPMorgan Chase’s hiring of Deloitte to analyze foreclosure practices also raises questions. Deloitte was the auditor not only for Washington Mutual, the huge mortgage lender that collapsed in 2008, but also for Bear Stearns, another defunct firm. Both WaMu and Bear were acquired by JPMorgan, so any loans they made may come under scrutiny by the same firm that audited their books.
Nye Lavalle, a foreclosure fraud expert who began warning bank executives about bad lending practices back in 1999, is troubled by this situation. “This review process is a wink-wink, nod-nod,” he said.
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