Mortgage Settlement Enforcement Monitor Claims Bank Leaders Are Lying to Him

Matt Stoller is a fellow at the Roosevelt Institute. You can follow him at jttp://

I was listening to Bloomberg surveillance this morning and they were discussing the problem of skyrocketing rents mixed with tight credit for mortgages and increasing foreclosures. One of the hosts said that “everyone was waiting for the 49 state mortgage settlement” as a go signal to start foreclosures again. That’s what the mortgage settlement really is, a cultural, legal, and political signal of “all clear”. How exactly a new wave of foreclosures is supposed to help the housing market is still something of a puzzle, but it does show that the administration and most settlement pushers really do believe that the market needs to clear via foreclosures before it can reset. I guess we’ll see.

Meanwhile, here’s more evidence that the settlement is really just meant to kick off a new round of injury to homeowners. The monitor of the settlement, court-appointed North Carolina official Joe Smith, clearly doesn’t know how to do his job.

The Federal Reserve and the Office of the Comptroller of the Currency could have built a best-of-breed project team inside their agencies to conduct the foreclosure reviews mandated by consent orders last April against twelve mortgage servicers. Instead, they delegated that job to each bank. As a result, the banks chose friendly firms and some of those choices are less than arm’s-length away from the problems and abuses they’re reviewing…

“I don’t have a quick and easy answer to that right now,” Smith said when I asked him how he’s going to avoid the same conflicts of interest we’re seeing in the foreclosure reviews when he hires his own “primary professional firm.”

Check out the rest here…