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Sat Jan 5, 2013, 02:32 PM

“Independent” Reviews Were Controlled by Banks, Suppressed Findings of Harm to Foreclosed Homeowners

OCC Foreclosure Reviewer: “Independent” Reviews Were Controlled by Banks, Which Suppressed Any Findings of Harm to Foreclosed Homeowners
Yves Smith - NakedCapitalism


You simply must read this post if you care at all about the rule of law or can stand to see the gory mechanisms by which “regulation” has now become a fig leaf for criminal corporate conduct.

Reader Luxtexente submitted this comment yesterday: http://www.nakedcapitalism.com/2013/01/pending-foreclosure-fraud-settlement-achieves-new-level-of-abject-regulatory-failure.html#comment-1000051 describing his experience as a Claim Reviewer for one of the 14 servicers, in theory working under the direction of Promontory Group and the OCC. He makes clear, contrary to other banks, which hired very junior people who had little understanding of real estate law and foreclosure procedures (see Adam Levitin and Abigail Field for examples) or foreclosure review firms who held themselves out as experts but have yawning gaps in their knowledge, that he and many of the other reviewers he worked with were very well qualified to screen servicer records. He describes how these reviews were systematically gutted.

Remember, the review firms were supposed to be independent, selected according to criteria set by the OCC and paid for by the banks, but supposedly not accountable to them. We had dismissed that idea early on as ridiculous. From a May 2011 post:

Let’s see…who chose these reviewers? The banks. Who is paying their bills? The banks. Who is a potential future client if all goes smoothly? The banks. And Walsh seriously expects us to believe the reviewers are independent, even before we get to the rampant conflicts?

But as Luxtexente tells us, it was much worse than that. It wasn’t simply that the consulting firms airbrushed out unflattering findings so as not to ruffle their current and hoped-for future meal tickets. The banks were actively involved in overseeing the project and the results were shameless rejection of any and every possible basis for borrowers getting recompense. He provides numerous examples of unquestionably abusive conduct, such as foreclosing on homeowners in non-judicial states without advertising the notice of sale as required by law, or failing to send a notice of acceleration. Enough of the reviewers understood state law requirements that they would find many, often over a dozen, violations on a single file. So how did the bank and the OCC conspire to solve this problem? They redefined the review process so as to omit matters of law. I am not making this up.

This is what corruption looks like at the operational level. I suggest you read this piece closely; it’s chock full of damning tidbits. For instance, Luxtexente gives us one reason why the cost of this process got to be so high: he and his colleagues were being paid early on to do nothing.

From Luxtexente:

It is a first time one of a kind project. In theory those of us who joined were actually going to make a major financial debacle right again. We were going to examine 1.8 million mortgage foreclosures for technical error, misrepresentations, fraud, and failure to comply with Federal and state foreclosure laws or procedures.

Many of us are older and have been in the mortgage business in one way or another for 20 plus years....


Much More: http://www.nakedcapitalism.com/2013/01/occ-foreclosure-file-reviewer-independent-reviews-were-controlled-by-banks-which-suppressed-any-findings-of-harm-to-foreclosed-homeowner.html

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Reply “Independent” Reviews Were Controlled by Banks, Suppressed Findings of Harm to Foreclosed Homeowners (Original post)
WillyT Jan 2013 OP
Wellstone ruled Jan 2013 #1
Jackpine Radical Jan 2013 #2
truedelphi Jan 2013 #3
JDPriestly Jan 2013 #7
truedelphi Jan 2013 #8
JDPriestly Jan 2013 #10
WillyT Jan 2013 #5
Wellstone ruled Jan 2013 #4
HiPointDem Jan 2013 #6
No Compromise Jan 2013 #9

Response to WillyT (Original post)

Sat Jan 5, 2013, 02:38 PM

1. This crap was known by manny,

every time folks tried to expose this crime,they were systemically killed by the media. This issues won't go away,the housing bubble has more to come. Dick Durbin said,the Senate is a wholly owned subsidiary of Wall Street.

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Response to Wellstone ruled (Reply #1)

Sat Jan 5, 2013, 02:46 PM

2. Manny knew this? Why didn't he tell us?

Manny Goldstein is a ratfink.

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Response to Jackpine Radical (Reply #2)

Sat Jan 5, 2013, 03:21 PM

3. I think that Manny has tried to tell us.

And many others knew too.

Meanwhile, the Geithner is running all around the world, trying to make sure that tax havens exist for his friends, so he can turn over his top spot at Treasury to the next Bought And Paid for Criminal who will soon be replacing him.

And Geithner is leaving treasury, not on acount of his lying to Congress, which is an impeachable offense and should have deprived him of his office at Treasury long ago, but on account of being offered a cushy job on Wall Street.

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Response to truedelphi (Reply #3)

Sat Jan 5, 2013, 06:00 PM

7. I dealt with only very few of these situations.

The pattern was obvious from the get-go. I did not expect to find fraud and corruption.

I was utterly taken aback because I thought that no corporation could be as obvious as these lenders were (not all banks but mostly involved with banks sooner or later).

I am so grateful that someone posted this article.

One of the reasons that I am so vehement about my belief that a lot (by no means all, far from it) of bankers and mortgage lenders should be in jail is that they have sewn the seeds for distrust and a generalized lack of confidence in our entire capitalist system.

We had a pretty good thing going in the US. Capitalism was bringing us prosperity and a good life for most Americans and then a few greedy liars came in.

I fear that the damage they have done, the crisis of trust that they have caused, could lead us to make very bad mistakes.

All life must be balance and harmony. When the need to be richer than everyone else becomes too important to a person, they fall out of balance, are no longer in harmony. They can knock over the whole cart and cause terrible damage. I think this has happened and we are not yet on the way to the real recovery, the recovery of trust in your neighbors, in your local bank, in your boss or employee, etc.

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Response to JDPriestly (Reply #7)

Sat Jan 5, 2013, 09:41 PM

8. I am someone who has not had a bank account in over three years. My local grocery cashes my

Local pay check. Anything larger than that, I go off to a Payday loan place. It usually means a 2.5% charge on my money - but if I didn't do that, I would have to get a checking account (Something like$ 27 for a box of checks) and wait a week until the bank decided that 1) I am not a terrorist and that 2) whoever sent me the check, from one state over, did send me the check. And usually the bank makes me feel like I am gross and undesirable.

This is how much total distrust the whole episode of being in "Medical Bankruptcy" has left me with. And the good thing about just cashing a large check is I have control. No more Insufficient checks to be scolded and penalized for - I have the money and I know how much and there are no longer arbitrary sums of money held back by the bank for arbitrary reasons.

(One thanksgiving a few T's ago, I bought $ 15 of gas through my bank debit card - and then $ 75 was held over for three or four days as something the bank decided it could do to me, since the $ 15 for gas put me under having $ 100 in the bank account.)

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Response to truedelphi (Reply #8)

Sat Jan 5, 2013, 11:49 PM

10. I am sorry that you have had such a tough time, but I know I am pretty sick and tired

of the Wall Street types who are so callous toward people like you and me.

All I can do about it is communicate with people like you about this situation.

As I said, I was completely shocked to discover what the mortgage companies and banks had done.

And by the way, they also did this to some companies that leased equipment. Most lenders are not to be trusted. It is very sad. I know one person in banking who is very, very honest, but that he is one of the exceptions.

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Response to WillyT (Original post)

Sat Jan 5, 2013, 03:29 PM

4. There was a story on a Wall Street blog about a

certain desk job at Goldman Sachs sometime back,that had the Timmy the Dunce's name on it. Apparently his new job at Princeton must have fallen through.

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