Morgenson on the Sham of the OCC’s Foreclosure Reviews

Given that the Office of Bank Boosterism Office of the Comptroller of the Currency is the clear first among the highly competitive ranks of bank-friendly regulators, the fact that the OCC launched a program for borrowers to obtain restitution for financial harm suffered due to foreclosures seemed more than a bit sus.

Gretchen Morgenson does an admirable job of exposing the multiple shortcomings of this OCC program. She quotes Alys Cohen of the National Consumer Law Center, who nails it: “Not only will it not help people, it could easily harm them.”

This is yet another Obama Administration “pretend we are helping ordinary citizens when we are in fact helping the banks” scheme. The most damning tidbit comes late in the article, that borrowers may (I’d assume will) be asked to sign releases that are far broader than the matters under examination. In other words, to get whatever relief the OCC provides, borrowers may unwittingly give up rights worth far more:

For example, participants in line to get remuneration may be asked to give up their rights to defend themselves if they get into financial trouble again.

“This process is not meant to fix the original lending practices, so people need to hang on to their right to challenge the original loan later,” she [Cohen] said.

Morgenson’s account depicts several shortcomings. The banks hire “independent” auditors of their practices, and Morgenson identifies two that look compromised (including one flagged by Michael Olenick on this site). And why, pray tell, isn’t the OCC conducting these reviews? Similarly, the review covers only 2009 and 2010, when many subprime borrowers hit the wall earlier. It’s pretty clear that this process, like the bogus Foreclosure Task Force (which reviewed 2800 loan files and did no validation of the data in those files) is designed to give servicers a clean bill of health, with only some problems that will be deemed to be minor and on their way to being remedied.

What is more than a little frustrating is that this regulatory-initiative-as-coverup is SO predictable, yet so few journalists treat these programs with the skepticism and derision they deserve. We can only hope that one of the perverse benefits of the protracted housing recession will be that media and public complacency erodes.

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  1. Cathryn Mataga

    Obama — evil or stupid? That’s what I’m trying to figure out. Though — since the 40,000ft comment, I’m siding towards stupid. Maybe he really believes his finance buddies have all the best intentions?

    1. Foppe

      You can just as easily see that quote as proof of his belief that economics is beyond morality, (a conviction perhaps helped along by the fact that the sec isn’t doing anything).

      1. Cathryn Mataga

        Interesting. I sense from these guys that all their outrage is reserved for the Republican-Democrat conflict. That left-right politics is what fires up the emotion in Obama-like people, and criminality, maybe it just doesn’t register as important.

        1. Mikhail Kropotkin

          Neither evil or stupid, nor left or right. They are just the footmen and butlers to the ruling class. And this is just yet another minor entry in the process of continuing business as usual.

          The vast majority of the courts and judges are part of the game, do not look to them for relief.

          The real question is what will we really do about it? OWS is just an organising start point with a semblance of here-we-are advertising.

    2. sleeper

      No, not stupid – Evil.

      It is crystal clear that the financial good old boys are being protected.

      Clearly the less than 50 state solution is a sham, clearly the DOJ / FBI is being directed not to investigate or prosecute, clearly the state Attorney Generals are being directed not to investigate or prosecute. In fact the FBI has closed it’s fraud office in Nevada.

      The Fed secretly loans trillions to a few favored bankers at special low, low rates who then loan the money back to the Treasury making billions in the process. And very little of the money is used to float loans to the 99% and thus stimulate the economy.

      The often repeated canard that US workers wages are too high and thus noncompetitive that flies in the face of the facts both government and anecdotal. After all if wages rates are the driving factor why does Honda have plants in Ohio, why does BMW have a plant in Spartanburg, SC, why is Nissan in Nashville ?

      These are the designs of evil not stupidity.

      1. Ray Phenicie

        Evil is the best word, as intentionality should not enter into what the President does in this situation. The words ‘what was intended was____ but we did not mean for that to happen,’ should be forever banned from Presidential rhetoric. Yet that is exactly what Mr. Obama has uttered although managing to circumnavigate around the statement with rhetoric found in the 40,000 leagues under the sea comment.

    3. Damian

      evil or stupid ? my vote is evil !

      there are too many correlations that show he is in the loop to push the bank accountability to the floor with no redress – he is too close to Dimon and obviously Dailey is in the next office – those guys do not want truth or criminal indictments or RICO actions which are all deserved

      this one issue for obama will sink him and it will grow to be seen that he is directing traffic at the DoJ. As momentum builds more and more evidence will come out that justifies a criminal action this coming year.

      for owners of portfolios and defense lawyers for borrowers seeing evidence that is clear, specific and identifiable across multiple portfolios – it will be recognized that his indictment “policies” will be seen as the banks complete line of defense

      the best hope is the AG’s of NY / Mass / Ca / Nev

      1. sleeper

        “this one issue for obama will sink him”

        I think not. The issue will not be raised – MSM will keep all eyes will be on Michelle’s ass, on the latest starlet’s struggle with drugs/sex/divorce, the latest flat screen and so on. This is by design – evil design.

        In the end the election will become a horse race of dollars and poll results. In the end the mantra will be he’s better than the alternative even though both choices are equally poor.

    4. nonclassical

      WikiLeaks answered the ??..Obama had deal with Bush-Cheney
      to NOT do “transparency, oversight, accountability” for election fraud (Michael Connel-Cheney’s I.T. man), war fraud, and economic fraud…”look forward-not back” my butt…

    5. Jill

      Cathryn Mataga,

      He’s evil. Let’s imagine that he just happens to keep designing war and financial policies that were mistakenly used to harm others. Not likely, but let’s imagine it. So, when the reality of the situation is pointed out time and again even a stupid person realizes; “oops, made a mistake and need to correct that!” But strangely, Obama never corrects his “mistakes”. He just keeps on making them or worse ones.

      For example, his drones keep killing civilians, just about every day. That’s kind of a big mistake to ignore isn’t it? Paul Krugman rails about how Obama just keeps getting outfoxed by evil Republicans? How come PK can figure that out but Obama never can? Why doesn’t he sign up PK to run things so Republicans can’t keep outfoxing him? I mean, getting outfoxed all the time has to be embarrassing at some point. And killing civilians? A person with a conscience, even if they were a little “slow” would try to stop doing that wouldn’t they?

      However I do hear many Obama supporters claim stupidity in his favor. I find that bizarre. Usually, stupidity isn’t a good reason to vote for someone. I don’t see how it would be. But the Obama cult uses anything it can in service of his election.

  2. Michel Delving

    NCLC Asserts that More than 4 Million Consumers May be Harmed

    NCLC Attorney Alys Cohen’s written testimony:

    U.S. Senate Banking subcommittee hearing “Helping Homeowners Harmed by Foreclosures: Ensuring Accountability and Transparency in Foreclosure Reviews,” (includes links to testimony of all witnesses):

  3. matt weidner

    And more and more consumers get sucked into the vortex of fraudsters, con artists, loan auditors, etc., (in addition to the “legitimate” hucksters appointed by the gubment) who are preying upon the “NEW GOVERNMENT PROGRAM!” Bandwagon. After every new program, they pounce…drawing in new and unsuspecting victims. It will never stop until this is all burned to the ground….and no one is ready to confront that reality.

  4. Correct:Answer: Evil.

    What’s this guy doing @ 40,000 feet?!? He belongs down here on the ground next to me, where it’s all happening. HE KNOWs you can’t see the money changers in the temple from 40,000 feet. Nor, can you see the purse snatchers.

    Did George Washington preside from 40,000? He knew that @ 40k the best you get was plausible deniability. Does an honest man need plausible deniability? If a tree…sorry- if a crime’s happening on the ground, but you nobody’s around to hear it, sorry-see it- did the crime occur?

    Obama says what was going on was immoral, not illegal, that’s why we had to change the laws. If a crime happens before the law was made, did a crime happen? This is jsut like ‘what the definition of is is, an “I did not have sexial relations with that woman.”

    If America and Americans slip(s) down the drain while You intentionally remain @ 40,000 feet- turn your back and put your blindfold on, are you my president? Glad You stay out of harms way Mr. president. BTW- have ANY idea why the carnage down here? Lotta empty homes. Hoovervilles. Families packing their Hutmobiles goin’ west to pick cotton 50 cent a sackfull. WhatEVER happened here, I dunno. It WASN’t a CRIME THO. And what- You were outta town. At 40,000 feet. So we KNOW it WASN’T YOU! Merry Christmas!

    1. Cathryn Mataga

      I mean, how can Obama not know about the robo-signing scandal? This doesn’t seem complicated to me — forged legal documents, all across the country. I am not a lawyer, but like, come on, dude. What the hell? This is not a subtle issue, it’s like rampant criminality all through the financial business. This has to be an argument for evil — or maybe massive denial.

      On the ‘stupid’ side, I have to admit, I’m just going with gut instinct here. That interview makes me think it’s really more on the ‘stupid’ side. If he was evil, wouldn’t he be more ‘Corzine-ish’ — and say they’re investigating (even if they aren’t) or some other kind of legalistic evasion. I get more the sense from this interview that he’s just befuddled and lost, and doesn’t have a clue.

    2. nonclassical

      The basic tenet of Obama and the disloyal opposition has been to blame the rape victim for being raped…

      Teachers, unions, public schools, state employees, immigrants, state government (as states melt into Naomi Klein “disaster capitalism”), Fanni-Freddie, U.S. government itself…(anyone but Wall $treet-where 6 U.S. “investment banks” now control $600 trillion=derivatives, up from $880 billion circa 2001…

    3. Ray Phenicie

      As I pointed out above-Mr. Obama is actually 40,000 leagues under the sea-out of touch and ensconced in a bubble world made for him by the thugs housed in the vampire squid complex

  5. Richard


    Happy Holidays.

    As always, you bring up an important issue. In this case, it is the role of journalists not to reproduce the press releases sent out by regulators, but to actually spend the time to at a minimum question, if not analyze, what the press release really says.

  6. Jack Straw

    Matt – great point. If there were a conspiracy to legally bleed all remaining resources (including, but not limited to legal defenses) out of distressed borrowers for the benefit of predators – and provide possible sustenance for them – it would look like this.*

    Anybody interested in my my job search history with this OCC-mandated project can contact me at

    * It’s not a stretch at all to say that these programs, mandates, whatever, have the manifest goal of getting large numbers of borrowers to settle, waive or otherwise compromise or undermine their potential litigation claims. Furthermore, they are largely exercises in finding cost-effective ways for the parties holding (claiming to hold) the secured debt to have assurances against litigation. The rules have not changed with respect to due diligence in client representation, good faith in making claims, and anticipating and complying with discovery, particularly regarding the clients’ histories in seeking a solution to their problem. But the economics have. Lawyers in this area – adverse to parties holding (claiming to hold) the secured debt – have to spend far more time upfront than they used to determining whether a potential client has already essentially (or arguably) settled a case, before they should be charging forward. Lawyers who don’t do this are 1) crazy; 2) inexperienced; and/or 3) more-or-less unqualified. I could say more, but I don’t think I need to.

    1. Cathryn Mataga

      “The “NEW GOVERNMENT PROGRAM!” Bandwagon.” Yeah I see those phone calls and spam emails. It’s the latest version of the “You have already been pre-approved” scam. This country opted for ‘financialization’ — and now that this is the backbone of the US economy, and because the financial system doesn’t actual do anything useful, they can only survive by wringing the last drop of blood out of the mortgage holders.

      If Obama cared about this country at all, couldn’t he at the very least point our vast army of direct phone call scammers towards some other country and steal their money instead? At least the Nigerians bring in foreign exchange, you gotta’ give them that. We could learn something from them.


    Four articles written by Neil Garfield on Living Lies
    re: Barry Fagan v Wells Fargo Bank



    Contained within those exhibits, are 3 different versions of an ORIGINAL Deed of Trust, along with multiple fraudulent loan applications.

    Exhibit A is the Deed of Trust as filed with the Los Angeles County Registrar Recorders Office, while Exhibit B and Exhibit C were provided by Wells Fargo Bank as alleged original documents. The magnified version of page 4 all clearly show variations of the same hand written number and is an indication that the original Exhibit A as recorded in the Los Angeles County Recorders Office has been altered since it was originally recorded.

    Re: Link to Lis Pendens with Evidence of Deed of Trust alteration and fraud by Wells Fargo Bank.

    And evidence of multiple authors of Wells Fargo Bank employee Rhonda Bernard Thomas

  8. angry& NOT TAKING IT!

    it would be appropriate to find a website to post ALL of the review applications
    submitted with homeowner application [including customized additions] to detail and record in the public spotlight just what & pointed at whom to create a lump to big to sweep under the rug!

  9. Gawain's Ghost

    Merry Christmas, Ms. Smith.

    I’m surprised you haven’t written a review of Reckless Endangerment. It’s actually very good, exposes a lot of what went on to set up this financial crisis.

    But I guess that doesn’t make for enjoyable holiday reading.

  10. Frank Speaking

    “…yet so few journalists treat these programs with the skepticism and derision they deserve.”

    you mean unlike the skepticism and derision they exhibited towards Greenspan’s free money fed rate, rating agency corruption and the nitrous oxide enriched atmosphere in every nook and cranny of the financial sector as yet another ballon inflated (preceded by bank petro-dollar loans to third world nations requiring tax payer bank bailouts through late 70s well into 80s followed by Micheal Milken’s junk bond/S&L boom and bust fraud requiring tax payer bailouts through late 80s well into the 90s followed by the tech boom and bust of the late 90s) which makes us current to the Phil and Wendy Gramm derivative bubble hurried along by fed lending rate policy of free money for banks, insurance companies and hedge funds to gamble on newly deregulated derivatives—what could possibly go wrong?

    you are worried about the barn doors NOW?

    sorry but the horse done left the barn…the barn burned down…and the horse got hit by a train…the train derailed and the engineer and brakeman were killed…the train’s cargo of ammonia gas ruptured and wiped out the residents of three towns…other than that everything is going as planned.

    to paraphrase the last line from Chinatown, “let it go Yves, its capitalism.”

  11. skinla

    Whenever I read about what Obama is doing or not doing, it is always the same story. In reality, this GUY IS CORRUPT. Here are some sentiments expressed by an Obama’s (ex) supporter that I found on the web. It is sad that we can pretty much say the same thing about any issue Obama is dealing or avoiding:

    President Fuck You: Raising Medicare eligibility to 67 is a “modest reduction”

    Fri, 08/19/2011 – 7:55pm — lambert
    Oh no it’s not.
    Hey, any Obama supporters still out there? The clue train is leaving the station….
    NOTE About the headline… Using the word “Fuck ” is a proud tradition in the lefty blogosphere. But really, Obama says “Fuck you” to the left all the time. “Little single payer advocates.” “Fucking retarded.” “On drugs.” Yet the left is just as powerful, numerically, as the Tea Partiers, if not more so. And yet nothing we say or do has the slightest impact on anybody in the legacy parties at all, including Obama. We are completely unrepresented. Even though we keep being, ya know, right about stuff. And handing $16 trillion dollars to the banksters, no questions asked, no strings attached, and then dicking around with medical care for old people is an asshole move anyhow. So, “President Fuck You.”

    1. Frank Speaking

      “And handing $16 trillion dollars to the banksters, no questions asked, no strings attached…”

      Who did that?

      Sixteen trillion…really?

      f bombs and delusional thinking explains much of why the left has been left.

      and you seem a bit confused to attribute power to the fictional Tea Bag Party which is nothing more than a wholly owned subsidiary of Koch Industries which created it to unleash a death by a thousand cuts campaign against a sitting President.

      and where were you per chance in the fall of 2009 and spring of 2010 when Frank-Dodd was being written? for that matter where was/is the AFL-CIO, where was/is the labor movement other than the state house in Wisconsin?

      could it have something to do with pension funds?

      in a capitalist economy everyone is complicit.

      as I said previously the horse has left the barn

  12. Jill

    I also went to the site linked in the article:

    The links provided to the companies at the site did not work.

    I wanted to see one of the letters because I was wondering if they were written in ordinary language or if one needed to be an atty. to understand them. I was also wondering if people had been forced to leave their homes, how were they being located. This appeared to be sent to people who will still in their home, but certainly some must have been forced out? If so, how are they being reached?

    1. fran

      One person I know received the letter today (in L.A., CA) at the address they relocated to after being evicted from their home of 30 years.
      (The house was sold by Wells Fargo using forged papers and with a Lis Pendens on it.)

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