Romney’s Foreclosure “Plan” Way Off

Posted on November 27, 2011 by Robert Doggett, Texas RioGrande Legal Aid

Mitt Romney’s position on foreclosures sounds similar to real estate brokers who think they stand to profit from more foreclosures (more sales, more commissions); nevermind how crazy it is:

ROMNEY: Are there things that you can do to encourage housing. One is, don’t try and stop the foreclosure process. Let it run its course and hit the bottom, allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up. The Obama Administration has slow-walked the foreclosure processes that have long existed, and as a result we still have a foreclosure overhang.

Mitt Romney, watch it yourself here.

I have heard this “let the market work” argument repeatedly after the banks got their bailouts and now are turning profits, giving bonuses and trying a variety of ways to increases their fees.  At a press event over the summer I took a preachy tone in frustration.

“[A]re we going to blame this whole mess on a guy who lied on his loan application? Really? Have you all been duped that much that you are going to continue to write that story, that that is what this is all about? That Wall Street didn’t invent mortgage-backed securities?

This stuff didn’t just happen overnight. The guy who lied on his loan app didn’t just get born these last four years. This thing was created by Wall Street and aided by the players. Everyone had their hand in it. The Realtor, and no offense to Mr. White, but the profession, what is their answer — sell, sell, sell! Absolutely. That’s what they want. That puts more money in their pockets.”

Robert W. Doggett, Texas RioGrande Legal Aid, more of that story here.

Romney obviously has been advised to sound tough during this primary season — let those liars suffer, they get what the deserve is the thought process.  It might sound tough but it is totally wrong.  A editorial published yesterday took a moment to explain why he is way off:

Efficiency. Mass foreclosures are a rotten way to stabilize the market. They impose huge costs on neighbors, communities and local governments, and on the broader economy, as falling prices erode equity, depress consumer spending and mire the housing market in a deep hole.

Logic. Who does Mr. Romney think will buy up millions of foreclosed properties? Borrowers who lose their homes to foreclosure or who sell their homes for less than the balance on their mortgages can be denied credit for years; many will never be homeowners again. … Investors are inclined to buy distressed properties only if they believe home values will rise, a confidence that is hard to come by in a market that is threatened by more foreclosures and renewed price declines.

Danger. With the economy still weak and vulnerable to shocks, more foreclosures and the resulting price declines would only weaken the economy further.

Fairness. The let-it-crash argument conveniently ignores that the housing bubble was the result not only of overborrowing but of reckless lending too. When the bubble burst, the banks were bailed out, while speculators and uncreditworthy borrowers — whom lenders had aggressively pursued during the boom — quickly began to lose their properties. But the economic damage went far beyond the “bad” borrowers, as evidenced by deep recession, ensuing slow growth, high unemployment and crashing home values — all of which has now harmed millions of homeowners who never went near a subprime mortgage. They are the collateral damage of the banks’ binge and bailout. They deserve help, not scorn.

NYT editorial, November 26, 2011 - here.

At a recent debate, Mr. Romney was asked why he was willing to risk further huge losses in home equity by pushing foreclosures. “What would you do instead?” he replied. “Have the federal government go out and buy all the homes in America?” Story here.

What is needed is a set of policies — rentals, forbearance, principal write-downs and refinancings — on a scale that tackles the problem.  So far nobody has successfully pushed forward such a plan so we all continue to suffer while to politicians wrangle on what sounds better to the voters and donors.  Romney painted the choices as: 1) tough it out and take our medicine or 2) let federal government take all our homes.  Seems fair.

Filed under: National Foreclosure News | Leave a Comment »

Independent Foreclosure Reviewers Named, Rest Cloudy

Posted on November 22, 2011 by Robert Doggett, Texas RioGrande Legal Aid

Today the federal Office of Comptroller of the Currency (OCC) released the latest update on the enforcement of its lame Consent Orders negotiated with the industry over the summer. Many were critical of those “orders” here.

The update aka Interim Status Report covers several topics which we’ll chew on later undoubtedly, but it does release some of the details on the federally created Independent Foreclosure Review which some have suspected will be whitewash job to help the industry cover its robo-signed tracks.  Story here and here.  The Independent Foreclosure Review is not going to be done by a judge, a neutral attorney familiar with the law, or governmental official — the reviewers are instead hand-picked accounting firms selected by the loan servicers and paid by the loan servicers.  Who are they?

[And the winning accountants especially selected and paid for by each servicer are]:

  • AllonHill, LLC, for Aurora Bank;
  • Clayton Services, LLC, for EverBank;
  • Deloitte & Touche, LLP, for JPMorgan Chase;
  • Ernst & Young, LLP, for HSBC and MetLife Bank;
  • Navigant Consulting, Inc., for OneWest;
  • PricewaterhouseCoopers, LLC, for Citibank and US Bank;
  • Promontory Financial Group, LLC, for Bank of America, PNC, and Wells Fargo Bank; and
  • Treliant Risk Advisors, LLC, for Sovereign Bank.

OCC Interim Status Report: Foreclosure-Related Consent Orders November 2011, at Page 5 here.

If you could, wouldn’t you want to hand pick the judge that decides your fate in loads of cases and be the one to pay him?  Would you want him to understand the law or just be able to count?  The feds decided to explain that the Independent Foreclosure Reviewers are really, really independent because they label them as independent repeatedly in their report and because they rejected some of the consultants initially recommended by the servicers.  Reminds me of the Herman Cain defense paraphrased: “Some will claim that I sexually harassed them but there are thousands that will say I didn’t.” (Actual quote here.)   Wow, OCC rejected some of the hand-picked people — that must mean they have approved ones that are truly independent.

On Page 6 of the report OCC explains all the requirements needed in order for the approved reviewers to maintain independence.  It is nice that they have something written down, after all, the financial services industry is well known for abiding by memos, guidances, and directive from regulators.  (See Jon Corzine, MF Global and the missing 1.2 billion here. Of course when the firm was borrowing at ratios close to 40 to 1, the regulators sent memos.  Yeah that worked well.  Now there is a “shortfall” that is growing.  Wallstreet even whitewashes the term for theft.)  Memos, directives and guidances on independence are not nearly as critical if servicers did not get to hand-pick and pay the reviewers directly.

But OCC did not just name the reviewers, it provided the letter agreements between the parties — redacted.  OCC link here.  Remember the OCC considers lenders and their cronies to be their customers.  I don’t know what term they give homeowners or the taxpayers.  Regardless, OCC’s customers would likely prefer that as little information gets out to the public as possible.  So naturally, OCC has blocked out entire pages of the letter agreements.  OCC says they blocked a little information that is personal and proprietary.

I counted over 22 pages were blocked out just in the agreement between the reviewer and Bank of America.  Many of the blocked out pages appear to describe the review process itself and possible conflicts of interest.

See the Letter Agreement for reviewer Promontory Financial Group, September 6, 2011 - here.

Of course there were block-outs scattered throughout the entire document as well.  I am still reviewing the agreements with the other reviewers.  OCC is leaking a little more information, but not enough for anyone to really believe the Independent Foreclosure Review process is fair.  If you feel differently, I’ve got some MF Global stock to sell you.

Filed under: National Foreclosure News | Leave a Comment »

Independent Foreclosure Review Application – unofficial online version

Posted on November 10, 2011 by Robert Doggett, Texas RioGrande Legal Aid

Update of 6/18/12: Rust called and claimed that the form to apply for an independent foreclosure review was theirs and I can’t I use any part of it.  I don’t get why they don’t want people to know about it, but I decided to do as they requested. So the form and the links to it have been removed.

———————————————–

While the rest of the world is moving toward electronic submissions and streamlining processes — the feds, a “third party” contractor and loan servicers are kickin it old school regarding the recently announced Independing Foreclosure Review.  Paper and snail mail.

You cannot just download the official Independent Foreclosure Review application form off of the web if you are interested in applying — you have to call the contractor (Rust Consulting) and give them your name, contact info, the name of your servicer, the address of the property where the foreclosure activity occurred, and the loan number.  They will also confirm the date of the foreclosure activity began in the relevant time period (if it only just started in the last year and you are still living in the home, forget it — this process is not designed to really help anyone much).  More on the fatal flaws in the process here and here and here.  Then Rust Consulting sends you the application by mail so you can fill it out and return it to the administrator (I assume Rust Consulting) by mail, who will then forward it on to the consultant the servicer pays and has hand-picked to review their complaints.  (See earlier posts linked above.)  I’m betting at some point the application is input into a database but who knows.

The feds refused to put the actual application online (or allowed for electronic submissions).  Of course the application is unnecessarily complicated and confusing, but there is no reason it should not be available online at least.  It only appears the feds are trying to prevent just anyone from applying — they want to prescreen a bit I suppose.  But it adds another barrier to the process.

Let’s talk about the specifics of the application.  The first page of the Independent Foreclosure Review application is the only one that has homeowner specific information preprinted on the form (the servicer, loan number, address of the property) — they merely took the information provided to them on the phone and preprinted these three things on it. Here [Removed per demand of Rust] is a sample of the first page of the application with the preprinted information and some bar coding scratched out so you can see for yourself.  The rest of the five page application has questions and blanks and a crazy acknowledgement at the end.

I took the first page of the application and typed it up and merely left blanks for the three things such that a homeowner could circle and fill those his or herself, then I attached the rest of the application as is.  Here is the complete application [Removed per demand of Rust.]  I also added a few lines to the beginning on the first page that simply ask that the name of the person who made the decision on the application be provided, along with all the information given to the decision-maker aka the “decider”.  (I sincerely doubt these requests will be honored because fairness is not a part of this process.)  Homeowners should definitely make a copy of the application and send it in by certified mail.

I intend to send a copy of this application to Rust Consulting and get their reaction.  If someone sends in this form completed, I would be interested in learning the result.  I think it likely that the homeowner will be sent Rust’s version of the form because efficiency is not the goal, but it at least will be easy to send back in because pages 2-5 are completely identical (and the first page should be filled in already by Rust Consulting).  I am assuming a homeowner will keep a copy of the application(s) they send in and any other documentation provided so it can be sent in over and over (just like homeowners are required to do under HAMP arguably).

Filed under: Advice for Borrowers | Leave a Comment »

Are Rust and Feds already lying about Independent Foreclosure Review? It’s Biased.

Posted on November 4, 2011 by Robert Doggett, Texas RioGrande Legal Aid

Update here.

After the Independent Foreclosure Review was announced, I was curious about whether it was truly independent, and I called Rust Consulting who operates the phone number for the program.    The Rust representative claimed to not know who selects the reviewer or who pays the reviewer.  See story here.  Another advocate called and spoke with another Rust representative with similar results.  Rust would only indicate that the feds (the agencies that protect the industry, not the Consumer Financial Protection Bureau) approve the reviewers but it refused to acknowledge or confirm that the reviewers are in fact selected by the servicer and paid by the servicer.  Story here.  Well the feds admitted otherwise:

Numerous readers asked for further information, and several questioned how in good conscience could consultants hired and paid for by the servicers they are examining be considered “independent?” In so many words, they asked: “Isn’t that akin to the wolf watching the hen house?”

Joe Evers, the deputy comptroller for large banks at the OCC, said independence is “a crucial component” of the consent orders against the servicers. “We’ve gone to a great deal of effort to ensure the consultants are truly independent,” he said during a telephone press briefing.

Indeed, according to Evers, some outfits that applied to be consultants, including a few law firms and subservicers, have been disqualified because the OCC did not believe they could be autonomous.

MarketWatch story here.

Wow — the servicer selects a consultant and pays them.  Refusing to allow some law firms and subservicers hardly means the reviews will be independent.  Does Evers or the other fed agencies truly believe that these reviews will be independent under these circumstances?  Let’s see, you are a servicer — are you going to select a consultant that is more friendly to you, that has treated you well in the past, maybe worked for you?  Maybe you have an ongoing business relationship with the consultant, or maybe you know the consultant would want to continue doing business with you in the future.  The power of selection alone will affect the process.

Let’s say you are a consultant — are you going to try to annoy the very large servicer who is paying you by finding lots of violations, or are you going to gloss over the violations and listen to every excuse by the servicer in hopes they continue to pay you, and give you more work in the future or a reference for more work in the future.

There is no downside for a servicer to select a consultant favorable to them, and there is no upshot for a consultant to find violations during their reviews.  Hacking off a homeowner (or former homeowner) costs the consultant nothing.  Hacking off a servicer will affect the consultant’s bottom line.  This process is by definition biased.

The feds I suppose will say “don’t worry, will be watching.”  That has worked so well in the past.  This scheme is not even as independent as the arbitration system set up to ripoff consumers because of the bias of the arbitrators. (Even the Wall Street Journal has found as much, story here.)

But if you want to apply for a review anyway, either call them and get the official application mailed to you, or fill out this unofficial version here.

Filed under: Advice for Borrowers, National Foreclosure News | Leave a Comment »

Is the Independent Foreclosure Review really independent?

Posted on November 3, 2011 by Robert Doggett, Texas RioGrande Legal Aid

See update to this story here and here.

———————————————–

Is the “Independent Foreclosure Review” a real help to borrowers, or the latest program announced by the feds in a long series of faux efforts to make it appear the government is responding to the misinformation (we used to call them lies in grade school) and forgeries committed by servicers in their handling of foreclosures across the country?  You decide.

HAMP was predicted by all but the administration to be a total failure and it did not even meet those expectations.  HARP was equally worthless.  The latest change to HARP announced by Obama was just more lip stick on that pig.  (Nice story summarizing them both here.)  For all these programs borrowers have no rights and the servicers operate in a black box.  These programs of course were written by the financial services industry in lieu of giving borrowers anything meaningful like the cramdown right in Chapter 13s.  While the 50 state attorneys general still debate remedies, the feds swooped in with the consent orders with the familiar refrain — servicers promise to follow the law and continue to operate in a black box.  Borrowers have no rights, again.  It was not just me complaining — about everyone that was not bought off by the industry has a problem with the feds’ consent orders.  Story here.

Now the feds announce the new “Independent Foreclosure Review”. The amount of detail in the program reminds me of the one page bailout bill the last administration tried to get Congress to approve.  (It might be two pages depending, copy here.)  But we can garner a few opinions from what little is there.  See FAQ here.  First, it does not apply to anyone having trouble now or in the last year.  Seriously.  It is for people that either got foreclosed on and evicted over a year ago (like they still have all their proof and haven’t moved on with their lives), or it is for people that worked it all out with the servicer already but they are still hacked off and willing to mess with the servicer afterwards.  This time period requirement alone is beyond troubling.  The feds would hate it if they got in the way of servicers trying to actually foreclose wrongfully.

I could go on about borrowers have no rights (again), and that the review is another black box for which there is no appeal, no rules, no guidelines (the lack of rights for borrowers is consistent with all the other government programs announced in the last three years) — here is my number one concern with this program at present — and its title is the tipoff.

If you have to put “Independent” in the title, then it probably isn’t.

So I called the Independent Foreclosure Review hotline (1-888-952-9105) and spoke to Tryka at ext. 7131.  I think she picked up on the first ring after pressing #3.  Amazing start.  Tryka wanted my full name but only gives out her first name.  She works for a company called Rust Consulting who is a “third party” she said, and who set up the website as well (http://independentforeclosurereview.com/).  Link to Whois here.  I asked who the independent reviewers would be.  She didn’t know, but they would be “approved” by the feds.  She listed the names of the federal agencies thinking that might impress me.  It only frightened me more (OCC, Federal Reserve, OTS — the usual suspects that consider financial institutions as their customers and borrowers as necessary evils).  Funny the CFPB was not in the list.  Who is paying the reviewers?  Yeah, she doesn’t know that either.

How can you say these are independent reviews if you don’t know who the reviewers are, who initially selects them, and who pays them?

But in the spirit of Fox News, let me be balanced here.  I do like that the definition of foreclosure that triggers a review is fairly broad enough to cover many situations:

  • The property was sold due to a foreclosure judgment.
  • The mortgage loan was referred into the foreclosure process but was removed from the process because payments were brought up-to-date or the borrower entered a payment plan or modification program.
  • The mortgage loan was referred into the foreclosure process, but the home was sold or the borrower participated in a short sale or chose a deed-in-lieu or other program to avoid foreclosure.
  • The mortgage loan was referred into the foreclosure process and remains delinquent but the foreclosure sale has not yet taken place.

And I also like some of the examples given that may have led to financial injury:

  • The mortgage balance amount at the time of the foreclosure action was more than you actually owed.
  • You were doing everything the modification agreement required, but the foreclosure sale still happened.
  • The foreclosure action occurred while you were protected by bankruptcy.
  • You requested assistance/modification, submitted complete documents on time, and were waiting for a decision when the foreclosure sale occurred.
  • Fees charged or mortgage payments were inaccurately calculated, processed, or applied.
  • The foreclosure action occurred on a mortgage that was obtained before active duty military service began and while on active duty, or within 9 months after the active duty ended and the servicemember did not waive his/her rights under the Servicemembers Civil Relief Act.

But given the holes already mentioned, and the consistent protection of the financial services industry to date — it smells to me like yet another smoke and mirror job.  But we won’t know for sure until borrowers apply.  There are no details about what will be done should the independent reviewer find a problem but who knows if they ever will.  But if you want to apply for a review anyway, either call them and get the official application mailed to you, or fill out this unofficial version here.

Filed under: Advice for Borrowers, National Foreclosure News | Leave a Comment »

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