Quelle Surprise! Fed Issues “See No Evil” Report Using Bogus Methodology to Defend Servicers

We commented earlier this week on bank defenses of their foreclosure practices:

I’ll spare you several paragraphs of the “but they were deadbeats and no one was hurt by robo-signing and all our foreclosures were warranted.” Well, if you normally operate as judge, jury, and executioner, and it’s too costly for borrowers to counteract predatory servicing, in your little self-referencing world, everything will look hunky-dory and challenges to your authority will be deemed to be improper and unwarranted.

As we have indicated repeatedly. lawyers fighting foreclosure estimate that 50% to 70% of the cases they represent are ones where the borrower is in foreclosure as a result of bank fee pyramiding and other improper fees (note there is sample bias here; contrary to bank spin, most borrower attorneys fight foreclosures when they think the case has merit). But they just about never argue in court on those grounds; the cost of hiring an expert witness and doing the forensics on full details of the banks’ overcharges is too costly.

But of course, the Fed is throwing its authority behind the banking industry spin that all foreclosures are warranted. From Shahien Nasirpour of the Huffington Post:

A months-long investigation into abusive mortgage practices by the Federal Reserve found no wrongful foreclosures, members of the Fed’s Consumer Advisory Council said Thursday.

During a public meeting attended by Fed chairman Ben Bernanke and other regulators, consumer advocates on the panel criticized federal bank regulators for narrowly defining what constitutes a “wrongful foreclosure.” At least one member of the panel voiced concerns that the public would not take the Fed’s findings of improper practices seriously, since the wide-ranging review did not find a single homeowner who was wrongfully foreclosed upon….

Kirsten Keefe, a member of the Fed consumer panel and an attorney at the Empire Justice Center in Albany, New York, said the Fed’s report defined “wrongful foreclosures” as repossessions of borrowers’ homes who were not significantly behind on their payments….

But Keefe, who represents troubled borrowers, argued that the definition should be expanded to include foreclosures in which the wrong party brought the foreclosure action or cases that involve significant errors in foreclosure documents, like an inflated past-due amount, for example. Other consumer advocates at Thursday’s public meeting appeared to agree.

FYI, the Fed apparently has not released the actual document, no doubt to save itself well warranted ridicule.

The more this sort of whitewashing of abuses goes on, the closer the US gets to its Egypt moment.

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  1. Expat

    Why should anyone give a rat’s ass about foreclosing on deadbeats when this same great nation of ours uses and condones torture? Ask Americans about torture and they almost all say the same thing: “It’s okay because they are guilty.”

    That great American Leona Helmsly said that taxes are for the little people. Well, laws are for the little people, but not for the rich or corporations. Gosh, if we made banks and billionaires obey the law then would not make as much money…and that is downright un-American.

    Egypt? Ha! All I hear is baaaa, baaaa, baaaa.

    1. Ray Phenicie

      Then you will be joining me while I am protesting in Madison, Wisconsin this weekend?

  2. Francois T

    Remember the ferocious opposition to the renomination of Ben Bernanke?

    No one should be allowed to forget that it is Obama would heavily insisted to have Bernanke confirmed, AND, tried his damn best to dilute the Audit The Fed law. He even flirted overtly with the most probable REPUBLICAN opponent to Bernie Sanders who was the most adamant that the Fed should be audited thoroughly.

    Despite all this BS, Bernanke was nominated with the lowest % of “Yeas” ever for a Fed Chairman.

    And No! There won’t be an Egypt moment in the USA. Solidarity is nonexistent, polarization is maximal and people prefer to rip the neighbor apart instad of attacking the powers that be.

    They got the hoi polloi exactly where they want it to be; and the sheeple comply.

  3. James


    Can you please dispense with the obtuse latin idioms (‘quelle surprise’, ‘mirable dictu’, ‘quid pro quo’, etc…)?! I feel like an idiot looking them up. Ugh.

    Just kidding. Thanks for the great work.


    1. Yves Smith Post author

      Actually, the irony is probably too thick with “mirabile dictu”. Changing to “quelle surprise”

  4. Paul Repstock

    The real ‘irony’ is that Arrianna Huffington got paid $320 millions for selling out, while ‘Yves’ will be ignored and probably burned at the stake as a “Traitor to American Values”.

    Way to go Yves! You have our love all the way.

    The ‘stake’ thingy was a bit over the top. I have great faith in the ultimate common sense of the ‘common people’.

  5. CaitlinO

    Well, what a bright shining day for average Americans.

    Tea guzzling Kochroaches pass a union busting law (probably) illegally in the middle of the night and the Fed gives a clean bill of health to the criminal bankers.

    What will we have left when no laws are respected or followed?

    1. Paul Repstock

      Freedom Baby!…)

      “Freedom is what you have, when you have nothing left to loose”..LOL I cannot remember the exact words to the song.

      Love your neigbour as yourself…remember, this is coming to you from an agnostic.

      A few words now from your proto anarchist sponsor:
      “A government, by definition, cannot be democratic. Since governments cannot represent the conflicting wishes of all constituents, they generally revert to self interest. Which is why they entered politics in the first place.

    2. ScottS

      Serfdom, sharecropping, debt peonage, poor houses, debtor’s prisons.

      Shall we stop calling it Capitalism and start calling it Dickensianism?

      1. Paul Repstock

        LOL buddy; “A spade by any other name is still a spade”

        In spite of mangled quotes, I couldn’t agree more. And till people wake up to see that every single human on earth is in the same sinking lifeboat, we won’t be able to fix the problem. Denial of rights and freedoms of ‘other people’, is what allowed this mess.

        Fair is defined as equitable. In our frenzied grasp for security we have assumed that equitable meant lowering ourselves to the lowest common denominator. That looting frenzy has allowed us to be gamed by those who have been writing the rules. Fairness is now a quaint notion suited only to loosers and have nots.

        The very roots of Economics (If one strips out all the mumbo jumbo nonsense) holds that trade is essential for civilization. (no one person could possibly produce everything they need) The definition of trade is that it leaves both parties owning something they value (otherwise they wouldn’t have entered into the trade)

        Capitalism got subverted along the road. The fairness aspect got stripped out of it by force and thuggery.

        1. DownSouth

          Paul Repstock said: “The fairness aspect got stripped out of it by force and thuggery.”

          And by necessity:

          For the liberation of the labourers in the initial stages of the Industrial Revolution was indeed to some extent contradictory: it had liberated them from their masters only to put them under a stronger taskmaster, their daily needs and wants, the force, in other words with which necessity drives and compels men and which is more compelling than violence.
          –Hannah Arendt, On Revolution

          1. Paul Repstock

            Yes. An edict like, “if you want to eat and breath, you will do exactly as I tell you..”, is a very persuasive argument. Specially when backed by the force of law and weapons.

          2. DownSouth

            “if you want to eat and breath, you will do exactly as I tell you..”,

            The point is that libertarians have somehow managed to construe that as being “freedom” to choose.

      2. Dan The Man

        Here are the real definitions to 2 seemingly innocuous words.
        justice = ” lets keep fighting untill Im on top ”
        peace = ” now that Im on top lets stop this fighting “

  6. steelhead23

    There is one aspect of the accelerating decline of the rule of law that astounds me – the perpetrators appear to not recognize what is likely to come next. They should read more. Anything about Paris, 1789 would be illuminating.

  7. Blunt

    Goddess! How I wish I could believe that the US would have “its Egypt moment.” But, I suspect that Francois and Repstock are righter than most of us would like to believe.

    Although the reference to having nothing left to lose allowing freedom sounds great, in point of fact the French Revolution was never promulgated through peasant force. Instead Robespierre, Danton, Marat, and the other “lights” of that illuminated rebellion were solidly middle-class, even lower upper class people.

    They had more to gain, actually, not nothing left to lose.

    I’d imagine that as long as there is teebee and iPods and assorted other goodies and mind-numbing instruments for the “middle-class” that most of us won’t know we’re back to the mines with the Molly McGuire’s until we hear the canary singing and notice our bodies are very sooty.

    1. Paul Repstock

      You are forgetting the 80/40/20 split. What is left of our middle class is now in the bottom half of the “20”, struggling to assure themselves that they will be allowed to keep hat they have by virtue of being ‘Storm Troopers’/toadies for the ones who count.

  8. ChrisPacific

    Behind on their payments to whom? I can tell you right now that every single one of them was behind on their repayments to me – in fact I don’t think I’ve ever received payments from any of them. So by the Fed’s definition, any foreclosure action I initiate against them would not be wrongful.

    Granted I did not actually issue their loans, and I don’t hold title or have any standing to foreclose. But then neither do the servicers in many cases.

  9. monday1929

    Aren’t there many people with fully paid-off mortgages who were foreclosed on?
    Even the criminal banks conceded they “made some mistakes”.
    The FED could find not ONE?

  10. profoundlogic

    Call your state attorney general! They may be the last hope of any meaningful prosecutions for what William Black has best described as thousands of felonies committed -monthly- by our largest financial institutions.

    It’s pretty obvious the Fed and Washington (same entity for all practical purposes) are doing their best to absolve the banks and their executives of their criminality.

    Our “Egypt Moment” cannot come soon enough.

    1. Paul Repstock

      Thanks to Jonesing, I can suggest that the most important thing needed is a clean set of laws. One which is not subject to ammendment or exemption.

      It is hard for me to imagine civilzation functioning without rules.

  11. Max424

    That was a big loss, today, wasn’t it: 228.48 (-1.87%)?

    If the Dow keeps dropping like that, our elites are gonna get pissed, possibly get all reactionary on our ass. Despite our efforts, perhaps we will never have the time, or the opportunity, to put together an Gandhi-esque type “Egypt moment,” because we’ll be served up a preemptive “Libya to the 10th power moment” instead.

    The Beltway-Wall Street Oligarchy, out of ideas on how to extract more blood from the stone, with petty determination, kick-off the extermination proceedings, for lack of anything better to do.

    1. Paul Repstock

      Hey, watch what you wish for. It’s your pension fund, insurance policy, and tax dollar that pushed the Dow back up to 12,000 with only hot air below it??

  12. Donna

    What a joke! This is the finding? “but they were deadbeats and no one was hurt by robo-signing and all our foreclosures were warranted.”

    We put $151,000 downpayment, between 2005 – 2009, we made around $350,000 mortgage related payments, Wells Fargo still foreclosed our home based on its loan origination fraud. Fed doesn’t have to look far to find evidence that Wells Fargo has committed loan origination fraud and wrongfully foreclosed our home based on hugely inflated appraisal.

    If you believe big banks should be held accountable, please sign the petition on our website http://www.wellsfargomortgagefraud.com and join the fight, we will win this battle.

  13. lawgrace

    Clear refutation of what the Fed’s say, is the fact that lenders take back their foreclosure files after overwhelming proof that certain foreclosure mill lawyers are engaged deliberate foreclosure frauds. In fact, the latest news about Freddie Mac taking it’s foreclosure files from yet another foreclosure mill law firm (formerly David L. Stern and now Marshal C. Watson) is alarming! IT HELPS NO ONE for Freddie Mac or other lenders to remove their foreclosure files from foreclosure mill firms after it has become irrefutably shown those mills engaged in foreclosure frauds and various wrongs!

    On the other hand, taking those files does help conceal criminal acts of fraud! Taking those records, also helps conceal the thousands of properties for which fraudulent property titles have become recorded after sham foreclosures; and taking the files help avert the people with DEFECTIVE property titles from finding out that the properties they THINK they own, are yet owned by the people from whom they were illegally taken!!


    With Freddie Mac and other lenders in possession of evidence that could show criminal frauds and various Constitutional wrongs in the commission of fraudulent foreclosures carried out by foreclosure mills, impedes victims from recovering damages against those mills become neatly
    tucked away. Not even Freddie Mac or other lenders bother to sue those foreclosure mills for manifest malpractice, as even doing so will expose information that INJURED homeowners could utilize to recover against servicers as well as foreclosure mill lawyers!

    Further, because Freddie Mac HIRED the foreclosure mills that caused “actionable damages” and wronged people, those files contain facts and evidence for such people to sue Freddie Mac and whomever else “damaged” them!! These “damages” ARE SEPARATE FROM any lawsuit or litigation over who or what owns the note!!!

    Moreover, there is NOTHING to rejoice about concerning news of Freddie Mac or any lender taking its foreclosure files from foreclosure mills. There IS CAUSE FOR ALARM; and unfortunately, Attorneys General don’t seem to be able to prevent Freddie Mac from removing the critical information that AG’s need to prosecute people who are willfully engaged in fraud, and in stripping State and City Revenue of money to which it is entitled!!

    Further, the despicable and fraudulent manner in which thousands of families have become homeless due to illegal foreclosure proceedings and fabricated documents that the mills file in civil and in bankruptcy court often FAR OUTWEIGH the amount of the arrears –if there were courts that bothered with such things as fairness and the Constitution! ** http://chn.ge/eU2zAm

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