So, the powers that be have decided the Independent Foreclosure Review being carried out by the Office of the Comptroller of the Currency and the Federal Reserve wasn’t working out and wouldn’t have helped many homeowners anyway.
Instead, we got yet another settlement that is supposed to provide billions of dollars to homeowners whose homes were wrongfully taken in shady foreclosure actions and to those still deluded into thinking their loan servicers will modify their loans.
The 10 banks are supposed to pay $3.3 billion to 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010. And they are required to provide $5.2 billion in other assistance, like loan modifications and forgiveness of deficiency judgments.
The headlines sound great, don’t they?
Banks to pay $8.5 billion in foreclosure settlement
Trouble is, instead of the regulators reviewing each case and assigning compensation to those most harmed by the banks, now the banks get to decide how the money is distributed.THE BANKS! Yes, it appears this is just the latest in a long line of settlements that say homeowners are supposed to get real financial help fighting foreclosure and foreclosure fraud, but that lets the banks get away with business as usual.
Somehow, in these big settlements, the money doesn’t seem to actually find its way to those homeowners and the banks don’t mend their wicked ways.
Take, for example, back in February 2012 similar headlines touted a $25 billion settlement reached between the five largest banks and the attorneys general of 49 states. The settlement supposedly provided $17 billion for principal reductions and loan modifications and $2.5 billion for states to help their homeowners fight foreclosure. Too bad the vast majority of mortgages (those involving Freddie Mac and Fannie Mae) were excluded from receiving principal reductions and several of the states re-allocated their money to shore up their budgets without providing any foreclosure relief at all.
In addition, the AG settlement also supposedly required the banks to follow certain rules when working with homeowners facing foreclosure. As far as I can tell, these were just words on paper. For example, the terms of the settlement specifically prohibit banks from using robo-signers to create foreclosure documents. I’m pretty sure there are already laws against forging legal documents, laws the banks had been skirting without penalty for years – even during the AG settlement talks.
Now here we are, a year later, and the banks are once again paying up for continuing to flout the law and the previous agreement. It doesn’t take a genius to see it will take more than billions of dollars to prod bank executives into behaving. They seem to believe they are above laws, rules, ethics, even basic professional behavior.
Take, for example, another of the AG settlement’s impotent rules: one that prohibits banks from foreclosing on a homeowner who is working through the mortgage loan modification process. Well, the government’s HAMP program guidelines, put in place in early 2009 and clarified in 2010, stated that same prohibition. But the banks have been ignoring HAMP and dual-tracking foreclosures for years.
My personal favorite of the AG settlement rules – and something banks have been saying they’re doing for years now – is the so-called “single point of contact.” As far as I can tell from commenters on this blog and my Twitter feed, homeowners seeking mortgage mods are still getting the run-around from all the big banks.
Anyone want to place any bets about how much of the $5.2 billion in the new settlement will fund loan mods that will actually keep people in their homes. (Seems the AG settlement mostly covered the banks’ losses in short sales, which left homeowners out on the street as surely as a foreclosure would.) Or how many people wrongly foreclosed on will get any meaningful compensation from the same banks that screwed them in the first place?
Oh well. It’s not as if the Independent Foreclosure Review was that independent, anyway, seeing as it was basically being carried out by the banks themselves.
When will someone in power realize that sending the fox into the hen house to count the eggs is just plain stupid?
Update 1/10: Tellin’ it like it is …
Pending Foreclosure Fraud Settlement Achieves New Level of Abject Regulatory Failure