Quelle Surprise! Having No Idea What Really Happened in Foreclosure Reviews, OCC Parrots “Independent” Consultant Howlers

I was prepared to give the benefit of the doubt to incoming Comptroller of the Currency Thomas Curry. He did get rid of longstanding bank crony, the OCC chief counsel Julie Williams, and in an unceremonious manner meant to send a message to the rest of the organization. He’s supposedly trying to change the culture, which is a tall order.

But it was on Curry’s watch that foreclosure reviews intended to provide abused homeowners with compensation were shut down abruptly. On the one hand, this was never meant to be a serious exercise, but it turned into such a consultant feeding frenzy, with their fees for a bit over a year’s work coming in at $2 billion across 14 servicers, that they were becoming a costly embarrassment. And the GAO was also breathing down the OCC’s neck, first pushing for far more aggressive efforts to reach borrowers who were entitled to reviews, and then working on a report that was expected to find fault with the OCCs’ process. Matters got much worse in fall 2012. The media was picking up on the fact that the reviews were not even remotely independent. And we also learned from the consultant side that it was becoming far too obvious to too many people that the banks could not substantiate third party charges, particularly attorneys’ fees. It looked like large-scale bilking had taken place (not that that is any surprise after all the other misdeeds perpetrated by servicers).

So with this recap, get a load of the latest effort at damage control by the OCC, via the Financial Times:

Leading US banks accused of breaking government rules when seizing the homes of delinquent customers may have harmed as few as 4.2 per cent of borrowers, according to people familiar with the matter.

The disclosure of the percentage of borrowers who allegedly suffered financial harm due to foreclosure irregularities follows agreements in principle last month between US bank regulators and 13 financial groups involving $9.3bn to settle accusations that the groups engaged in illegal behaviour such as so-called “robosigning”…

The apparently meagre error rate – revealed by the OCC to Congress – may quieten some critics who have argued that the settlement was too small given widespread poor practices in the industry. However, it is also likely to fuel calls for increased public disclosure of documents held by the OCC, which congressional investigators claim may contain details that call the settlement into question.

To its credit, the journalist, Shahien Nasiripour, does provide a bit of understated skepticism:

The error rate is based on reviews of nearly 101,000 foreclosures. More than 500,000 borrowers requested a review. It was unclear how the OCC arrived at the 4.2 per cent figure.

This was a garbage-in, garbage out process. It’s not even clear what these reviews consisted of. For instance, at Wells Fargo, a whistleblower described how virtually all review requests were rejected. But for this purpose, it would no doubt be counted as a legitimate “no harm” finding. Here’s a few highlights from a post by Martin Andelman to show how rigged the process is:

“I have found errors that should be moved up through the ranks, but am told “quit digging so deep”…”put your shovel away”…Focus on the questions “in scope”… The review forms are set up so no harm could ever be found. It’s equivalent of an attorney presenting his case to a judge with just 20% of the evidence.”


“The foreclosed victims don’t realize if they do not provide specific dates on the intake forms… their complaints are considered “general comments” out of scope.

The kicker? The forms don’t tell people their information will be ignored if the complaints are not dated.

Mandelman reports that the insider

“also says that the questions on Promontory’s form are worded in such a way that it makes it very difficult to ever find fault. For example, by using compound questions, he is often told to answer “no,” when the first part of the question would be a “yes.””

Readers will recall we found the same sort of behavior (and a lot more!) in our multi-part series on the Bank of America foreclosure reviews: certain categories of harm excluded completely, pitched battles over review periods (which would lead to certain incidents being excluded), pushback from both internal reviewers and the supposedly independent review Promontory, including nonsensical excuses (like saying a foreclosure that resulted from the bank sending back checks sent on time pursuant to a modification agreement was no harm because the borrower hadn’t made any payments. Hun?) And that’s before you get to the evidence of major gaps in Bank of America records and probable document forgeries and fabrications.

Regulators need to pay a price for this sort of disgraceful performance. I hope Congress does not relent, because if it manages to turn over any rocks, what wriggles out will not be pretty.

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  1. Norman

    The last paragraph, considering what has taken place, to think congress will so such, well, how does that old saying go: “I have a bridge to sell you”! 4 more years of smoke & mirrors, but then, what can we expect from-as you aptly say-garbage in, garbage out.

    1. Yves Smith Post author

      The point here is it will take very little in the way of pushing to reveal a lot of creepie crawlies. There are a couple of committees that might go after this. The OCC needs to pay a price, even if it’s just being embarrassed in public. And more important is to permanently discredit the delegation of regulatory duties to consultant hired by corporations. That’s a crock and it should be possible to stop or severely limit that practice.

      1. sd

        The nitty gritty investigations happen at the sub-committee level. Identifying and then corresponding with the members who sit on the relevant and appropriate sub-committees may make some headway.

  2. LucyLulu

    None of my Congressmen care. Any ideas of who in Congress I can contact to push the envelope? I’ll go out of district if necessary.

    1. Yves Smith Post author


      1. Maxine Waters

      2. Carl Levin

      3. Carloyn Maloney

      4. Darryl Issa

      5. Elijah Cummings

      6. Elizabeth Warren

      7. Alan Grayson

      The GAO is issuing a report in March, and their earlier report was critical, so this issue should get a boost from that.

      1. LucyLulu

        Thanks. I’ll give them a call. Usually they’re easier to reach when they’re not in session, but I’ll try this week and again when they get back home. I definitely want to try to talk to Alan Grayson (and after all, I lived in Florida 5 years ago, though not in his district.) And I donated to Warren. I like Maxine, too. And I thinks Cummings is okay, too.

        Today, according to thomas.gov, the Senate is taking the Hagel nomination back up again. Arrgh! They’re supposed to confirm him today though. His requisite disapproval delay time has lapsed now, and they’ve made a thorough mockery out of his appointment. We haven’t elected people who want to reduce government, they want to destroy government…… or at least all the positive features. The drone and financial welfare programs are fabulous successes, ya know.

      2. Enslavedlikeme

        The OCC and Attorneys General non-settlement is all part of the continued delay tactic giving the debt buyers Ocwen, Walter, Blackrock, Blackstone, WL Ross, Nationstar (Fortress) time to acquire/form/solidify strategic relationships. It takes time to develop, fine tune and share their “high touch” debt collection technologies and sometimes they need to adjust their corporate structures (Walter is now a MD Corp.04/09) until statute of limitations deadlines pass.

        These guys now control mortgage servicing rights to several hundred Billion in Unpaid Balances. The majority of which, I suspect, are those homes still held in Limbo by Foreclosure Mill Attorneys. Jason Allnutt (GMAC, Fannie, RDS, and now CEO of Auction.com) appointed mine just prior (a week or two) before Fannies Common stock was taken control of. I’m wondering who still owns Fannies Preferred stock. Does anyone know?

        I randomly selected one of OCWEN’s Corporate Board members to see what they’ve been up to lately. William C. Erbey – Ocwens Exec. Chairman of Board since 1996. Among many accomplishments Mr. Erbey is Chairman of Home Loan Servicing Solutions, Ltd., a Cayman Islands exempted company, formed in December 2010 to acquire mortgage servicing assets.

        Oh you want more. OK, here’s another. FORTRESS – Daniel H. Mudd (born 1956) is the former President and CEO of Fannie Mae, a post he held from 2005-2008, and, more recently the CEO of Fortress. Oops – Dave just stepped down from Fortress Jan. 2012.

        I acknowledge the above are just mere coincidences and everyone is entitled to make a living. And, to be quite honest – I admire their intelligence.

        And, I like Elijah Cummings, but I’m also getting the impression that he does the Huff and Puff stuff so his “peeps” think he’s guarding the henhouse, but Nothing ever happens. Has anything really?

        Have NC readers known about this or am I just full of pooh?

        1. Enslavedlikeme

          Sorry, poorly thought out question regarding the preferred stock.

          What I’m searching for is whether there may be Sr. preferred stock or maybe bonds that will pay off big time when Fannie gets wound down. Or, maybe it will just be a break even situation.

          Anywho, thanks.

          1. LucyLulu

            While I have no crystal ball, there may not be any payout at all to stockholders if and when Fannie winds down and/or conservatorship ends. Right now, US Treasury is majority stockholder, 80% I believe, and has a good chunk of preferred stock. There are other common and preferred stockholders but only Treasury gets to receive dividends while they are under conservatorship. Treasury was issued the stock in return for agreeing to provide funding that the GSE’s could draw upon, up to some predetermined limit. They drew upon the funding liberally initially, but are now turning a profit again from what I understand, and able to pay Treasury the dividends owed. I don’t know when the conservatorship will end, I don’t think it is known yet.

            I doubt your foreclosure mill attorney owns your house. They don’t typically buy homes. If your home loan was under Fannie, then Fannie would own your home. Fannie and Freddie never bid directly on homes in the past, and often still don’t, at least where I live. Usually the foreclosing party, typically the servicer, buys the home at auction, then later transfers it to Fannie or Freddie. You can check your county register’s office to find out who owns your home, they should have the current deed, or you can check the tax records to find out whose name is on the tax bill and has been paying the taxes. Most places they can be accessed online, but in any case, they are public record. Yves posted a while back that the GSE’s were planning to sell their housing inventory off in bulk quantities to large investors who would use them as rental housing for a few years until the market recovered. Caveat emptor.

            I’m sorry you lost your home.

        2. LucyLulu

          Everyone is entitled to make an honest living. The mortgage servicers have been anything but honest. I don’t know if you read my response yesterday to your post about Walters but they sound like real scumbags.

          1. Enslavedlikeme

            Lucy – Yes, I did read and appreciated your response.

            I’ve not lost anything yet because they won’t foreclose. I remain the owner of record and the Foreclosure Mill appointed by Fannie has kept me in “limbo” for over three years now and it’s due to clouded title and reps.& warranty issues. I’ve done my research. So have the kleptocrats.

            Like I’ve mentioned in a couple of my recent postings, the debt buyers Ocwen, Walter, Fortress, WL Ross, Blackrock and their third party backers (helped by Fannie appointed attorneys) have captured my (any millions of others) assets and future income. Their role as bottom feeders, will not let anyone out of their responsibility,(and I am not asking for them to do this) because they have control of all your information. Just think about all the data everyone’s been feeding into their machine when they applied for their modifications. The “Hope Hotline” was financed and manned by the so called “Banks”. They’ve been stalling everyone and collecting all the data entered by all the phone calls, letters, documents. All with the supported by our Courts, State and Federal Gov’t, and all the other trolls that continue to earning their living off by feeding off our bones.

            There’s really only one way out and they (the machine no one can fight against) win there as well because you are no longer a threat.

            It’s our property, our assets, the strength of our labor, our intellectual capital that these Industrial Billionares seek. We are just resources and future wealth to them.

            Another poster offered this profound insight.

            “kleptocracy is violent, violent in both the getting and the keeping of its loot. Kleptocracy can not be reformed away. It controls and owns all the levers of reform. It can only be overthrown. And its overthrow will entail great violence, and the principal source of that violence will come from those who say they work for us but do so in name only and, in fact, are loyal to and serve institutions which the kleptocrats own and control.”

            …for those with ears let them hear.

  3. jurisdebtor

    Reading this post, I cannot help but remember how complicity politicians have been in this mess of foreclosures. For instance, this is from last year, but this is what was going in my home state (Bangor Daily News):

    “The Maine House of Representatives on Monday sustained last week’s veto by the governor of a bill that sought to protect homeowners during foreclosure proceedings . . .

    The bill, LD 145, would have prevented large mortgage companies from foreclosing on homes on which they might not have legal ownership. It further would have required banks to present the original mortgage note or proof of ownership before court proceedings.”

    Why didn’t the bill pass? From LePage:

    “This would simply create more paperwork in the foreclosure process with little benefit for Maine people.”

    Now, first off, I want to thank Libby Mitchell for staying in the Gubernatorial race back in 2010, and ensuring we wound up with LePage, who envisions Maine becoming some amalgamation of New Hampshire strip malls and Marden’s. Second, the most amazing thing is what the above quote does not capture–that the sentiment among GOP lawmakers in the state was that any regulation or legislation that protected defendants in foreclosure proceedings was harmful to the business interests in Maine, and those are the interests Maine should be concerned about. Not property rights. No.

    And with most GOP supporters, you could not get them to see that the legislation (and the larger issue of vis-a-vis dubious foreclosure claims/proceedings) was designed to prevent lenders from hauling someone into court, swearing the other person owes them money, offering no proof, and collecting. Nope. People are deadbeats and should pay their mortgage, that’s the solution to the problem, in the eyes of some. All that stuff about property rights, and tort reform to prevent bogus lawsuits, that I hear as the basis for most arguments from the right–suddenly not applicable because everyone who defaults on a mortgage is a deadbeat, and in Maine, we have politicians who want to govern based on that premise.


  4. 2little2late

    “Leading US banks accused of breaking government rules when seizing the homes…”

    Government rules? Since when are the laws of the land “government rules”? Maybe that is more appropriate, seeing as how this government decides which rules apply and to whom.

    1. 2little2late

      Rules are for cider houses, not governments:

      What that is Homer?

      It’s a list of rules, it seems.

      Whose rules?

      They’re for us, I suppose.

      Go on and read ’em, Homer.

      “One. Please don’t smoke in bed.”

      It’s too late for that one!

      Stop it, Homer. They aren’t our rules.
      We didn’t write them. I don’t see no
      reason to read them.

  5. denise

    Any chance you would be willing to take a look at what these executives who were in volved in all of this…former
    BAC and Countrywide execs, alread sued by the FDIC…currently under investigation by the DOJ?
    They are all hopping on a new train called Vericrest Financial and are recreating WAMU/Countrywide ALL OVER AGAIN.
    Excellent article by writers at the Seattle Times…Feb.14,
    Former WAMU exec out at Vericrest…New CEO former exec at
    Could someone please shed some light on this????

  6. Bravo

    OCC credibility is most certainly a joke at this point. How is the error rate defined? The only universe of borrowers that they are going to look at are those 6% of foreclosed borrowers that received notice of the IFR and then even bothered to respond to what was arguably a bought and paid for, predetermined de minimis outcome from the beginning? And what about the vastly greater pool of borrowers who were unknowingly screwed at modification, reinstatement, mediation, or payoff via impermissible attorney fees and costs? The OCC is going to ignore those borrower overcharges in calculating its error rate? Quite likely the definition of error is ridiculously limited along the following lines: an error is deemed to have occurred only when a borrower made all payments on time or was in the military, received and then responded to the OCC notice of IFR, and was then foreclosed upon. The congressional investigative subcommittees should be demanding to send their own team of reviewers in to do a sampling of files from the vastly broader universe of borrowers who were harmed and will otherwise receive absolutely nothing from this settlement. It won’t take many files to confirm that 4.2% is just another blatant misrepresentation being pushed down the public’s throat.

  7. Susan the other

    We can assume that the settlement by banksters of the wrongful foreclosure mess will never be revealed. Those docs, held at the OCC, are going to be shredded just like the original notes were.

  8. Wake Up America!

    Would anyone be surprised to hear that my complaint with the OCC – filed in October of 2010 – is still in a “pending” status? They allowed BAC 6 months to respond and their response was “We need more time to review the complaint.” My home was stolen shortly after this response in a classic servicer-driven foreclosure so there’s no need for BAC to rush now.

    Yves, I thank you for your persistent and stellar work in covering what I think is the biggest heist in the history of our country. Sadly, I think very few of us will ever see justice.

  9. Joy

    My husband and I were not deadbeats, we just fell behind a couple of payment back in early 2008 and kept accruing massive late charges and fees, so we asked for a mod to refi and lower our payment. First told we had to be late more than 3 months so NOT to make a pymt, then we had to turn in numerous forms and paperwork, and so it went on for a year and half. We were 5 months behind but making payments after realizing their advice was crap. They filed Foreclosure and we filed Chapter 13 to save our house – they refused to mod, refi and only offered several repayment agreements that increased our monthly mortgage payment by $1500 or more a month. Oh, and they ALWAYS wanted a “downpayment” of sometimes as much as $3800 – which we always paid.

    This was with GMAC, and it wasn’t until 2011 when they started the whole Independent review that we hooked up with NACA and actually got a refi! We were shocked – they told us repeated we didn’t qualify, but as soon as the review was announced, suddenly we got it. But at the expense of our credit rating and our savings. We weren’t actually foreclosed on and our house didn’t go to sheriff sale because we did the only we could do and drained our bank accounts and 401(k)’s to pay on those agreements/downpayments and then finally to file Chapter 13 to avoid the Sale.

    These people in charge of any investigation need to realize that even those of us who didn’t actually LOSE our home, still lost much! Because of this whole thing, and the fact they denied our mod/refi over and over, we had to rebuild our savings and 401(k) (still working on that, we’ll never get it back in full) AND we can’t get a decent interest rate on a loan because of our trashed credit rating.

    I appreciated this site and everything Yves Smith does to expose this circus! It’s ridiculous!

    1. Enslavedlikeme

      No Sister, you guys are not deadbeats.

      The plan was to keep you, me, and millions of others in limbo. Unfortunately, chapter 13 still requires you to give keep giving them all your data, make payments and remain on their hook according to their terms.

      But, that’s where the bankruptcy lawyers (2005) wanted everyone to be. They’re also part of the same industry that’s generating a income. Amen?

  10. Dr. Pitchfork

    A 4% error/harm rate is supposed to quiet critics? If a surgeon cut on the wrong person/limb 4% of the time, that would be serious, ammaright?

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