The Mortgage Settlement Lets Banks Systematically Overcharge You And Wrongly Take Your Home

On my first read through of the consent agreements the bailed-out bankers (B.O.Bs), the Feds and the States I saw much as had been promised. One thing I hadn’t seen coming, however, was that the B.O.Bs would now be allowed to systematically overcharge borrowers and steal their homes. Seriously. Who cares about $1 million or $5 million penalties if horrible damage can be inflicted without punishment?

To see what I’m talking about, you need to look at Exhibit E-1. (It’s in all the consent agreements; here’s Chase’s.) Exhibit E-1 is a 14 page table titled “Servicing Standards Quarterly Compliance Metrics.” That is, it’s a table that details what, precisely, will be monitored to make sure that the B.O.Bs are meeting the very pretty servicing standards detailed in Exhibit A (again part of all the agreements.)

Note: You may want to print out table E-1 while reading this, or at least keep it open in another browser window or something.

Now, the table doesn’t come right out and say, we, the federal and state governments of the United States of America do hereby bless the institutionalization of servicer abuse, but it should. To understand why, you need to keep your eye on how the table’s columns are defined. For money issues, the critical columns are C “Loan Level Tolerance for Error” and D “Threshold Error Rate.” Later I’ll talk about the problems in Column F, the “Test Questions.”

Read the rest here…