Regulator Orders Seven Large Lenders to Review Foreclosure Procedures

This story on the Office of the Comptroller of the Currency’s inquiry into possible mortgage servicer improprieties was released last night by the Washington Post; oddly Bloomberg had not picked it up when I trolled it, apologies for not catching it sooner. Note that this development supports our contention that servicing problems are widespread. Note that the story indicates that regulatory scrutiny has moved beyond the issue of improper affidavits to document fabrication. From the article (hat tip reader Jim C):

John Walsh, acting director of the Office of the Comptroller of the Currency, told lawmakers during a hearing on the financial regulatory overhaul enacted this summer that some lenders “clearly had deficiencies” in their system for foreclosures.

The banks contacted by regulators include J.P. Morgan Chase, which announced Wednesday that it was freezing 56,000 foreclosures after finding errors in its preparation of documents, according to OCC spokesman Kevin Mukri. Other lenders contacted include Bank of America, Citibank, HSBC, PNC Bank, U.S. Bank and Wells Fargo.

“We both want to see that they fix the processing problems but also to look to see whether there is specific harm [that has been caused] in individual cases,” Walsh said….

The paperwork problems range from potentially forged documents to bank employees who never read borrowers’ files before signing off on an eviction….

Mukri would not comment about other banks but said that the OCC has teams permanently stationed at each one and that those teams have been in close contact with senior management at the banks to ensure the reviews are completed in a timely manner.

The fact that the OCC has on site staff putting pressure on top executives suggests that this is being treated as a high priority item.

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  1. steelhead23

    I know that OCC is not the FBI, but I cannot help but feel that at long last a well-informed entity is scrutinizing bank malfeasance. This certainly could lead to referrals from OCC to DOJ/FBI and some indictments among the bankster class. I keep hoping…

    1. MichaelC

      I think its noteworthy that the OCC is at least nominally independent and has recently been pushing back against the Admin and the Fed.

      As this issue has been gathering steam the interested parties participating , notably the judiciary and the AGs all have political inhibitions.

      Having the OCC jump in is a significant event.

  2. F. Beard

    Gee wiz bankers. It is already legal for you to steal homes. Can’t you at least adhere to the legal technicalities?

  3. Tom Crowl

    Great News! and thanks for keeping us all informed and up to date.

    There are issues in my own situation on which this may well have bearing.

  4. CT Mike

    Thanks for all your work keeping us informed on this matter. You probably saw this, but if not, there was an article in the NYT this morning:

    that said Old Republic National Title is no longer issuing title insurance on GMAC/Ally foreclosures. I confirmed this with someone I know who received the memo. I imagine other companies will follow suit, and the prohibition on title insurance sales will spread to foreclosures from other lenders. This could potentially cause sales of foreclosed homes to utterly grind to a halt.

  5. Chris

    Another case that clearly shows in a mountain of other examples how the free market is open to criminal elements. People cannot be trusted and need to be regulated, especially when the whole economy is at stake.

    Chase is still jacking my wife and I around. If they try to move on foreclosure we already have it in the works to retain legal counsel and force the to produce everything in the correct and proper manner.

  6. i on the ball patriot

    “Connecticut Attorney General seeks 60-day freeze on foreclosures”

    The rule of law is frozen,
    The game is on hold,
    The scum bag bankers,
    Are getting quite bold,

    Their theft is quite brazen,
    With a false paper trail,
    They arrogantly rob you,
    With no fear of jail,

    The womb of austerity,
    Now signals the pains,
    The bag of waters is leaking,
    The birth canal strains,

    Little baby mayhem,
    Will soon cry his first scream,
    It signals the end,
    Of the scamerican dream,

    The bugs flock to the lampposts,
    A feast is in the air,
    They’ll soon fatten on the blood,
    Of the bankers hanging there …

    Deception is the strongest political force on the planet.

    1. psychohistorian

      And the banksters work for the worlds’ uber rich so lets continue to clarify the focus on the REAL perps in these crimes against humanity.

  7. David

    I’m a little worried that with national authorities stepping in, some sort of blanket settlement will be crafted to allow mistakes, even those that are arguably fraudulent, to be corrected and foreclosures to continue. The OCC doesn’t need banks losing a lot of money on this.

  8. Dan

    Allow me to indulge in a moment of Randian pure self-interest: my house is currently in foreclosure, and I really want it over and done with ASAP; if my lender suspends foreclosures right now it will screw me up big time. I wonder how many other people will find themselves still in possession of property they don’t want because of this…

  9. george

    As much as I’d like to give it to the banks, somehow letting idiot homeowners off the hook isn’t my idea of an fair solution. Let’s not forget that it’s the taxpayer that ultimately will be (and has been) getting the short end of the stick here.

    1. scraping_by

      Ah, yes, who’s more at fault; the banks for offering the criminal loans or the customers for accepting? To answer after yet another mass ripoff, we’d have to examine it without the taint of hindsight. I suppose we can be groupish and say there’s enough blame to go around, but that really doesn’t catch it.

      Currently I’m partway through The Foreclosure of America by Adam Michaelson. He was the Senior VP of Marketing for Countrywide when it finally tipped over. His first hand account was of his warning everyone that the products they sold were insane, the customers usually didn’t understand what they were offered, and that everyone in the company knew the previous facts but didn’t care. So the wise bankers/irresponsible borrowers model just doesn’t work for at least one real world case.

      It’s true the mortgage bubble was a mania, following the script of every mania since tulips, but there were still people turning the crank to make it happen and keep it going. And most of them wore suits.

    2. Glen

      Idiot homeowners are true, but it’s doubtful they’ll keep the home, and they’ll have no credit. But the banks – they walked away with the loot, then got massively bailed out by the American taxpayer and are more than willing to do this ALL OVER AGAIN to make money.

      No doubt people took bad loans, but if you don’t kill the banks, it will keep happening, over and over and over, and you’ll keep paying over, and over, and over.

      1. Nathanael

        On top of this, many of the banks appear to have defrauded *both* the homeowners *and* the investors in MBS. They are compensating *neither* group. They’re just getting away with fraud and theft.

  10. F. Beard

    As much as I’d like to give it to the banks, somehow letting idiot homeowners off the hook isn’t my idea of an fair solution. George

    Fine, then let’s bailout the entire population including savers at the expense of the banks in real terms. How? Just have the US Treasury create some new, debt-free legal tender fiat and distribute it equally to every US adult.

    1. Nathanael

      I’m absolutely for this. The sudden inflation wouldn’t hurt and it would sure rebalance the economy.

  11. Glen

    I got curious about the one foreclosure where a bank was foreclosing on a property when Fanny held the loan. That means it was probably a bad loan sold back to the American people at full value (thank you Tim Geithner for putting a face on government stupidity).

    So how often are the TBTF banks selling properties that the American taxpayer have already bought from them?

    [And I have already edited out my low, low, low opinion of just how the TBTF banks are treating the American taxpayer that saved them.]

  12. wintermute

    “This could potentially cause sales of foreclosed homes to utterly grind to a halt.” CT Mike

    Doubts about title could bring ANY property sale to a halt. A search would have to be done into previous transactions in case one of them was a foreclosure followed by a normal market sale. Holders of prior title may dispute the onward chain.

    1. Nathanael

      MERS started around 1993, securitizations not long before that.

      Any property which has had *no mortgage* since before about 1990 is likely to have clear title.

      Unfortunately, the title insurers have insured many millions of properties since 1993. Their exposure is massive, far larger than their capital. They’ll probably all go bankrupt.

  13. koshem Bos

    Nothing in that is new, yet it is shocking. From the Supreme Court down to the last service provider , they treat us like monkeys

  14. Jim the Skeptic

    I saw a PBS Frontline story on credit cards some time back. My recollection is that while a consumer protection agency in San Francisco was investigating some complaints about credit cards from Providian, the OCC swooped in to warn them that they were interfering on the Federal playground. Eventually the press was so bad that OCC stepped in and required Providian to make $300Million in reimbursements. Providian was to pay a $5.5Million fine to the city of San Francisco.

    Now Elizabeth Warren is overseeing the establishment of the new Consumer Financial Protection Bureau. OCC is nervous that some of their turf will taken and that they will look like fools.

    So the OCC has become a raging bull, some of the banks are being asked to review their processes. I guess that they don’t have enough time to audit a small sample themselves. Probably too busy looking for another job!

  15. Barbara Ann Jackson

    Foreclosures via DECEPTIVE and FRAUDULENT PROCEEDINGS enables repetitive, and illegal property flipping; it enables lenders to falsify IRS form 1099-A”s; it enables unscrupulous foreclosure mill lawyers (especially because of judges who purposefully abet deceit) to deceptively hold auctions and make insider bids to acquire those properties; and blighted neighborhoods. Fraudulent foreclosures ensure
    the success of FABRICATED BANKRUPTCY COURT ‘Lift Stay motions’ and false ‘Proof of Claims’.

    Foreclosure via fraud is the reason for illegitimate homelessness and underhanded evictions, unjustified IRS tax bills due to false 1099-A’s, and unfair “Deficiency Judgments.” Ironically, some people who express their anger at “deadbeats” appear to be more acceptable about the manifest fraud and criminal activity being carried out by people with credentials to practice law. Equally ironic is the reality that some people pretending to be annoyed about
    “deadbeats”are the actual people who are participating in real estate racketeering -fully sanctioned by the majority of courts, especially Bankruptcy Courts! *more @

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