UPDATE: More opinions concur with my posting …
Banks Are Off the Hook Again op/ed here,
Rules for Mortgage Servicers Face Early Criticism article here, and
Critical Signs in Foreclosure Talks article here.
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Newsflash: the Obama Administration fails homeowners, again. Remember HAMP, his federal program he set up with the lenders that was supposed to save millions from foreclosure? Many knew it was weak and pathetic the day it came out. (Here is one such opinion.) And once HAMP was determined to be a failure by everyone on the planet, did anything change? You tell me.
Well, clearly looking toward reelection, his administration could not hardly be seen by Wallstreet sitting idly by while states attorneys general investigate violations of scores of state laws by loan servicers (joint statement here) — instead his administration is stepping in to protect the industry and save us all from alleged economic disaster. Leaving the financial services industry to their own devices has served us all so well in the past.
Something tells me once all the major loan servicers signoff on the deal, the government decides to continue funding itself, and the time for maximum press coverage is just right, the administration (or its regulatory agencies) will start their press conferences describing the amazing consent agreements that major loan servicers have agreed to accept — agreements that do next to nothing. The loan servicers admit nothing, solve nothing, and pay nothing — they truly are amazing. Here is a draft of the consent order being signed here.
Many who believe the industry should not be above the law object to the administration’s plan:
The existence of these proposed consent orders validates the repeated allegations that the servicers have been blatantly and repeatedly violating state and federal laws and contracts. Yet these consent orders permit the perpetrators of these recognized illegalities to create their own process for fixing the problems in the future. These as-yet-to-be-revealed plans apparently will be secret. Without transparency, there cannot be accountability.
Certain federal regulators of this nation’s financial institutions have allowed servicers to flout the laws under which they operate as well as the mortgage contracts with homeowners, government agencies, and investors. For example, during the years leading up to the current foreclosure crisis, the OCC aggressively tried to block state enforcement actions that could have dealt effectively with many of the industry practices that are wreaking havoc upon the American public today. These consent orders continue that pattern of attempting to block effective action at the state level, while permitting abusive practices by federally-regulated institutions to continue unchecked.
Letter dated April 6, 2011 from national labor, civil rights, consumer and community organizations to Ben Bernanke, Chairman, Board of Governors of the Federal Reserve System, John Walsh, Acting Comptroller, Office of the Comptroller of the Currency, Sheila Bair, Chairman, Federal Deposit Insurance Corporation, John Bowman, Acting Director, Office of Thrift Supervision. Copy of the letter here.
I wish I could say I am shocked and surprised, but I am not. Repeatedly the federal government has shown that it will do what the industry commands because of the threats of the industry and the fears that anything that will hurt the industry will impact the economy and deny President Obama his precious opportunity to fail the American people another four years. Hopefully his slogan will be more accurate this time around: “Vote for me cause I’m better than the other candidate.” If only I thought his administration was incapable of doing more.
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