Foreclosure Review Hearings Show It’s Time to Burn Down the OCC

There has already been a lot of good commentary on the Senate hearings on the misnamed Independent Foreclosure Reviews, notably by Pam Martens. I’ve finally gotten a transcript (see at Corrente which helps in reviewing it more carefully. Since Part 2 of the hearings take place this week, I’ll focus on some key issues that haven’t gotten the attention they warrant.

First is that even though Elizabeth Warren correctly has gotten a lot of praise for her pointed and persistent questioning, Sherrod Brown and Jack Reed also did exemplary jobs.

What emerged from the hearings, particularly if you have been following the story, is the remarkably poor performance of the OCC. The only open question is to what extent that resulted from pure incompetence, and how much resulted from being so completely captured by the banks that it swallowed their PR, that hardly any homeowners had been harmed by bad servicing, and accordingly botched the design and execution of a coverup. No matter which theory you subscribe to, it paint a picture of an agency that is hopelessly bad at its job, which raises the question of why it should continue to exist.

Let’s recount some of its gaffes so far. It said initially it was shutting down the process in part because it was taking too long to get money to harmed borrowers, and it had also found few borrowers were harmed. It then provided two different figures for overall borrower harm, first 6.5%, then 4.2%, but the latter was flagged as sus by the Wall Street Journal since the reviews for JP Morgan Chase had done the easiest files first (as in no Bear or WaMu) and thus come up with an error rate of 0.6%. Warren got the OCC to admit to what critics knew, that the OCC and Fed had settled while having no idea of the actual harm. Ironically, it was the Fed that wound up doing the brunt of the defense of the non-numbers; the OCC representative said later that this wasn’t his area but reviewing 100,000 file “is not valueless”:

Sen. Warren: The problem is that the 6.5% is not accurate. Your staff admitted to us in a meeting earlier this week that the number is not based on a random sample, not on a review of these cases; it was determined based on whatever files had been reviewed by the time you shut down this process…But the question I have is, what is the right number? Is it six tenths of 1%? Is it 6.5%, 9%, 11%, 20%, 50%, 90%? If you can’t correctly tell how many people were the victims of illegal bank actions, how can you possibly decide how much money is an appropriate amount for settlement?

Mr. Ashton, Fed: Well, Senator, I think I can only reiterate that the decision that was made to accept that agreement, and we recognized that that was not a perfect agreement, was based on the delay that would have been involved in any alternative. To continue the Independent Foreclosure Review and trying to –

Sen. Warren: Mr. Ashton, I’m sorry. I understand the point about delay. But it doesn’t mean you pick a number out of the air…. I can’t believe that you are saying that the only reason the number 9 billion was settled on was so that it could be done quickly, and that you’re saying that the OCC did not have an estimate in mind of how many banks had broken the law and how many homeowners were the victims of illegal activities. Mr. Stipano, is that the case for the Federal Reserve Bank as well?

Mr. Stipano, OCC: Senator, I am not an expert on the IFR settlement. I was not directly involved in it. I can answer general questions and I’ll do my best to do that. My understanding is that when it comes to the error rate, I don’t really know how it was calculated, to be honest. There are people in the agency who do. They’re not here. I do believe that we did review a substantial number of files, admittedly –

Sen. Warren: I’m sorry. Mr. Stipano, we met with your staff –

Mr. Stipano, OCC: Yeah.

Sen. Warren: – and your staff has made clear, you did not review a random sample.

Mr. Stipano, OCC: No, it wasn’t a random sample. No.

Sen. Warren: And without a random sample, can you then generalize to the accurate number, even an estimate, of how many banks broke the law?

Mr. Stipano, OCC: Um, not – in my, my understanding is not in a statistically valid way. However –

Sen. Warren: Okay, that’s a no.

Warren also secured the bombshell admission from the consultants that none of them had been involved in preparing the schedule of how many borrowers fell in which category of harm, meaning it was cooked up by the banks and the OCC. Her summation:

Sen. Warren: All right. I just wanted to make sure, because it appears that the people who broke the law are the same people now who have determined who will be compensated from that lawbreaking. I just find this one amazing.

But the admissions that caught my eye were that the OCC had expected the reviews to take 120 days and two of the consultants had said they’d expect them to cost between $5 and $8 million. If you take 14 servicers and $2 billion previously reported, the average is $143 million. Oh, and better yet, good child Deloitte got permission before the hearing from its clients to say how much it got: $190 million from US Bank, $175 million from Citigroup, and $60 million from Suntrust. That will pressure Promontory to come clean. I’m waiting with baited breath.

Now anyone who thought a nanosecond would know there was absolutely no way these reviews could be completed in 120 days. Recall there were two efforts (more on that shortly): the reviews based on borrower letters, and the reviews based on sampling of files. And this was to meet the goal of identifying all borrowers who suffered financial harm. I am not kidding you. The purported aim was to find everyone.

Now of course, the process of developing and vetting the letters to send to borrowers and printing and sending them would easily take a month. You’d have to allow for time for them to respond. So how in a 120 day time frame was there any time to do reviews?

The sampling track was similarly obviously insane. There is no way to identify all the borrowers harmed through sampling. The two processes don’t even mesh. The rationale was that the consultants would use a multi factor, iterative sampling approach to help identify populations that needed a 100% file review (and the engagement letters were of the flavor that those populations would be the exception, not the rule). But what happens even if this process had identified, say, certain types of borrower where the harm rate was 5% or 10%? Given their goal of identifying all harmed borrowers, you’d still need to review all the files in that population for that problem (admittedly not of the entire file, just related to that issue). But why sample? You could tell mods were a disaster. You could do a PACER search and find litigation that established that there were meaningful problems with certain types of loans, like borrowers who had filed for bankruptcy.

Now there is one way to make sense of these procedures: if the purpose of the exercise was really to find very low harm numbers. Remember the genesis: that the OCC broke from the attorney general-Federal settlement negotiations to impose the consent orders in order to derail the settlement talks. So then the elaborate sampling would serve to prove that the low findings of harm on the borrower letters were warranted. This dim view is confirmed by the GAO report released last week, which showed that the banks and the consultants expected 0% errors in most categories, and at most 10% in a few.

We also have the absurdity of the OCC saying it was in charge even though the banks engaged and paid for the consultants:

Mr. Stipano, OCC: No, I don’t think that’s accurate. We did require that the contracts be submitted to us for our review and we directed the servicers to put language into the contracts that made it clear that the independent consultants were acting pursuant to our direction, not the servicers.

Sen. Reed: In reality, did the independent consultants act at your direction?

Mr. Stipano, OCC: I believe so, yes.

Sen. Reed: Can you provide us documentation to that effect?

There’s a very simple proof that the OCC is at best deluded and at worst lying. There was no consistent definition of what harm was across the servicers. So even if the consultants had miraculously completed the review, the process still would have failed in its objective of assuring that similarly situated borrowers were treated similarly.

Of course, the whistleblowers at various servicers also undermine the OCC’s claim. As Pro Publica initially found, and we documented in greater detail, Bank of America was driving its reviews of borrower letters. At PNC, the consultants got inquires from the bank, not the OCC, as to how things were going, and reacted with alarm and put the reviews on hold when it learned the consultants were actually finding harm.

The OCC also got a beating for not having written standards for selecting consultants. Sherrod Brown honed in on the fact that Promontory had conducted an incredible whitewash on behalf of Standard Chartered (curiously avoiding mentioning Promontory by name):

Sen. Brown: We’re not – you used the word pristine. We don’t expect pristine here. That sounds too difficult. But we do expect, I think, clear standards in what qualified means. And, for instance if a consulting firm, and there is one in this situation, has repeatedly been, for lack of a better term, at the scene of a crime, what would it take before they are viewed as not qualified? What if they, for instance, what if they underestimated the value of an institution’s money-laundering transactions by 250 billion dollars or presented watered-down reports to regulators? Wouldn’t – that wouldn’t be enough for disqualification?

Mr. Stipano, OCC: Well, again, I think you have to look at the total context, but I do believe this is an area where there are lessons to be learned for us and we are committed to exploring ways to do better. And, you know, maybe that results in, you know, some kind of written standards. We don’t presently have them, but I think this is an important area and we are committed to doing a better job.

Brown also pointed out that Promontory board member Alan Blinder said that the IFR was not in Promontory’s “sweet spot,” and again tried to get the OCC to explain how they had been an acceptable choice despite that. He didn’t get a very satisfactory answer.

While it is gratifying to get some important admissions from key participants in this botched cover-up, it is still disheartening to know that the problems exposed in the hearings so far only scratch the surface of both the underlying borrower harm and bad faith with which the reviews were handled. I hope the session this week manages to turn up more dirt. There is unquestionably a lot there.

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  1. mcc777c2

    Banks have/are engaged in a massive amount of fraud and theft associated with the securitization of mortgages at each step of the process including foreclosure. Since the OCC has aided and abetted the cover up of these felonies, they should all be forced to stand trial as accessories. If the higher ups at the OCC engaged in any discussion with the banks aimed at limiting bank liability or otherwise aiding in this process, then they should also face conspiracy charges.

    1. Anonymous

      This is exactly right. We have clear evidence of a coverup of bank crimes against millions of homeowners by the OCC and the Federal Reserve. Additionally, it is time to put an end to the Fed, which has a private charter granted by Congress in 1913. Corporate charters may be revoked for criminal conduct. We are coming up on 100 years of criminal conduct by this private corporation against the interests of the United States. They have been counterfeiting our sovereign currency for decades. They have allowed private parties to use our citizens signatures on mortgage notes to be sold as securities and to circulate as a faux currency. They have given open access to the counterfeit currency they create to multinational corporations through the discount window creating trillions of dollars of debt obligations, without any authorization from Congress. They are buying mortgage backed securities which are founded in institutionalized fraud at a rate of $85 Billion Dollars per month to cover the mortgage fraud, while covering up the confiscation of US homes by forged and perjured documents on a mass scale. Enough is enough.

      1. Up the Ante

        An economy-wrecking banana republic crime state where the ‘Palace of Justice’ is held long-term.

        Any questions ?

    2. banger

      Yes, of course–if there was an honest government in place–but there is no such thing even possible in Washington.

    3. R Foreman

      Yeah, and it’s not just the banks. There are people in very high levels of our government who are condoning and aiding the ongoing theft of public money. It’s just baffling how this all went down. It’s as if they said, ok we’re going to transfer this $13 Trillion to these poor abused lenders (through various bailout mechanisms), but oh yeah we want that $13 Trillion worth of houses back too, and we’re sorry if somebody down the chain rooked you around and you lost your home and equity so here’s $1000.

      1. Up the Ante

        There’s nothing “baffling” about it, they offer timeshares called ‘Perfect Storm’ and they get bought.

    4. Westcoastliberal

      This “Independent Foreclosure Review” was another in a series of headline-grabbing PR moves designed to deceive the public into believing the Feds were reigning in the banksters. This was never designed to work in practice, just as HAMP was designed, as Geithner put it to Barofsky, to “foam the runway” for the banks.
      Once we understand the true purpose behind these facades, it’s easy to see how perverted our mafia-ruled government has become. This is obviously NOT government of, by, or for “the people”.
      I cheer Senators Warren and Brown for their efforts, but what they’re up against is an unbelievably huge, pervasive, and corrupt system on non-justice.
      IMHO the only way to solve it is to wipe out this entire regime and start over with new players, hopefully those w/o connections to any of the current players. I include Obama in this as his statements and recent actions (chained cpi?) prove he is a traitor to both his party and the office he holds.

  2. RueTheDay

    After reading Felix Salmon’s posting on Promontory the other day, I’m inclined to say it’s time to burn down the entire financial regulatory apparatus in the US and start from scratch.

    1. Anonymous

      There is no financial regulatory apparatus left in the US. We have a completely deregulated debt creating system founded on a private currency created out of thin air as debt. I am not against a currency which is not backed by gold, but I am against a system which allows private interests to create the medium of exchange as debt out of thin air. Without a strict regulatory framework, even a publicly authorized, debt-free currency would be destructive, but what we have now has become completely destructive to our civilization. Let’s stop looking at the result and examine the cause: The problem is a private, debt-based currency creation not permitted under the United States Constitution.

      1. banger

        You make sense–but the source of the problem lies elsewhere–the problem is that we have lost touch, as citizens, with reality. The fact is that we can complain about aspects of the system or even capitalism but it’s not the problem. We no longer live in a Constitutional republic with democratic institutions so that almost anything that goes on right now is a result of power struggles within ruling circles and the rest of us are just easily led chumps who salivate whenever a bell is rung etc.

        I don’t want to go into the specifics of why I think that but will if asked.

        1. R Foreman

          Well, that whole notion of Constitution vs. Oligopoly power is about to be tested, because there is just so much evidence of wrong-doing that even 6 years later you can drag 50,000 bankers and 10,000 regulators into court and put them away basically forever.

          At some point they must comply with the rule of law, or get more overt about their government takeover intentions. Are we a nation of laws or a nation of men? If the latter then I need to stock up on more food, water, and bullets.

          1. banger

            Well I don’t think the ruling elites need to do anything at all. The system appears to be to be very robust. Contrary to what some of think here there are no real looming disasters (with a fiat money system money, like power will come out of a barrel of a gun). People don’t seem to mind slowly declining incomes and declining public services that much–the change is not that fast or that deep. People I know just go along to get along and question very little–who wants to worry and fuss? There’s still lot’s to do many amusements all around.

            As for criminality of the ruling class–well if they do it is it really criminality? We are movingly solidly into a new form of feudalism–not sure how it will pan out but were slowly headed that way.

  3. just me

    Can Congress put a stop to this useless muck of a job and make them do it right? Dare we hope?

    Sen. Reed: Do you still think it’s the best alternative?

    Mr. Stipano, OCC: No. I think if we had it to do over again, we would take a different approach.

    Sen. Reed: You will have it to do over again.

    1. Banger

      Congress certainly could but it will not do it. The system is stuck, it is as fully corrupt as it can be virtually without possibility of reform particularly since the American people are more concerned with being entertained and cultural issues.

    2. pws

      Here’s the problem: This fish rots from the head down.

      Which means, that Barack H. Obama should be impeached. However, for purely political reasons, I can’t see anyone in the Democratic party doing that (Republicans would only try to impeach him on nonsense, and not things he’s actually done wrong, since he’s done wrong in the service of people who are their bosses, too.).

      Which means waiting out his term, hoping the rot doesn’t get too horrifying, and then trying again with the next President (who will likely also be a Rubinite Democrat in the pocket of the FIRE sector).

      The only wild-cards are the next crash, which is coming and which nobody is going to be even slightly prepared for, or a major, badly conceived war with someplace like Iran. In other words a catastrophe so bad that something actually has to be done about it. (Of course living through that catastrophe? That’s going to suck.)

    3. Procopius

      Isn’t there something called “the statute of limitations?” How does that play into this? Does that affect civil damages?

  4. Banger

    I think you can look at almost any small slice of the U.S. government and find corruption. The right has a point in wanting to drown it in a bathtub even though it is mainly the right that has caused the worst of the damage. I see no possibility of reform. Obama played the good cop/bad cop routine to perfection which shows that the major feature of American progressives is self-deception. With an ineffective left that can’t see beyond the culture wars how can we have reform? Obama indeed does live up one characterization that the right gives him–he is a true child of Chicago politics.

    1. JCC

      You forgot to mention the corruption of our private Banking System, including the Federal Reserve, not to mention the corruption of Governement specifically driven by the corruption of “privately-owned” Corporate America – companies as Monsanto, GE, Lockheed and the rest that are leading the charge.

      Maybe the right should also consider drowning these in a bathtub?

      1. banger

        Well, needless to say we are in the stage of truly predatory capitalism when corporations have unprecedented power due to their huge size and active collusion but also due to government corruption. Right now, there is practically no limit to corporate power because governments around the world are in collusion with the oligarchs that run these new and powerful mini-states called corporations.

        The key to moving beyond this situation is for people to grasp reality–sadly most people are too afraid to face the truth.

  5. Fraud Guy- Also

    And Obama just floats above it all. Nobody from the press asks him any hard questions about his financial regulatory apparatus. On the off chance they do, he’s ready with an anodyne “mistakes were made, but no laws were broken” response.

    People on the left need to confront the fact that, had McCain been elected in 2008 and the financial crisis aftermath gone down the same way, thousands would be marching in the streets on a daily basis by now. The NYT would have daily stories on the corruption. The senate would have continuous hearings. Instead, we get silence and indifference because “the good guys are in charge.”

    1. pws

      People were in the streets, and Obama suppressed them. The main problem is that they weren’t aiming at the source of the rot, the man, Obama, himself. I’ve thought about it and this was the chief flaw of Occupy… they weren’t trying to get rid of that s.o.b.

      If they had, they may have managed it. Now it seems we are stuck with him for a while longer yet. It will be a great failure of the United States if he leaves office without some kind of real sanction. (Think about this, Clinton who was bad but presided over economic growth, left office with greater disgrace to his name than I expect Barack Obama to leave office with. And Barack Obama has been an unmitigated disaster for all the years in office. I’m convinced at this point that John McCain, Goldwater Republican, would have both governed to the Left of Obama and also been a less corrupt President.

      1. different clue

        Here is what I feared from McCain. He has long nourished a deep bitterness about how America was winning the Vietnam War and would have won the Vietnam War if it hadn’t been for “those meddling kids”. So he would have sought an Iran War to show how wars are won. He and Palin would have tried their best to spark as many student uprisings on as many campuses as possible in order to put them down. ” Two, Three, Many Kent States”.

        But in fact, Obama operated a kinder and gentler version of that against Occupy. And I did not expect Obama to be this much of a straight up Gaidar-Yeltsin figure. With all his little Berezhovskys and Khodorkovskis.

  6. Roanman

    You have never met or even heard of someone who hates the banks more than I do, but having said that, the contention that very few homeowners were harmed in this fiasco is correct, as the vast majority of homeowners who were current on their note were not affected personally in any way and those that did not make their payments were mostly dealt with as provided for in the debt instrument that they signed.

    This whole thing has been a diversion from the real issue of wildly inflated housing costs that were in part brought upon us mostly on account of the ability resultant from MERS to circumvent well established state laws concerning recording of interests and the fees associated with those recordings. This allowed the packaging of mortgages into financial instruments that previously had to be sold off one at a time.

    The truth is that government from the Feds on down to the states all looked the other way and nobody really even peeped until the bubble burst , tax revenues at the local level went through the floor because of decimated assessments, and states starting to look around for cash flow suddenly remembered the money they used to make recording mortgage transfers.

    The real victim has been pretty much everybody who got caught buying into the bubble.

    Worse, the real bad guys are being completely bypassed in these hearings, mostly because a bunch of the guys holding the hearings are some of the real bad guys.

    1. Gary Piwonka

      After years of inquiries and disputes with Countrywide, BOC, Bank Of America and literally hundreds of documents sent by Certified Mail, innumerable phone calls with “clerks” whom had not one iota of my concerns and would kick the can down the road, I now find out the “Independent Inspectors” were NOT given privy to any documents contained in my files……HOW IN THE HELL CAN MY DAMAGES BE ASSESSED???

      1. Kim GARRETTP



    2. dolleymadison

      Ridiculous. Many, many folks who FC on WERE current – some did not even have a mortgage. Others who were “in default” were placed there by illegal servicer fees. And few, if any, who were FC on were FC on by the actual owner of their note. Mnay were servicmembers fighting for us overseas while back on shore their homes were being solen. Get a clue. This is not about “hating the banks.” Banks, when run properly, provide a valuable service to our economy and employee many thousands of honest people. It is about about respecting 300 years of property law and expecting our government to work for ALL of the people, not just Wall Street.

    3. Wake Up America!

      Roanman (or should it be “Rove Man”) said:

      “the vast majority of homeowners who were current on their note were not affected personally in any way…”

      While it is true that the vast majority of homeowners who were current did not lose their home, even a small % of this population translates into a huge number. And as DolleyMadison point out, many homeowners who were current were pushed into default by the servicers by illegal fees and practices (forced placed insurance, holding payments to create late fees, returning payments, etc.).

      How many homeowners who were current but struggling to make their payments were told by their servicer, “You need to be past due before we can consider helping you.” My guess would be millions. It is pure craziness to tell a customer who is paying to stop paying in order to receive help. The servicers wanted to manufacture as many defaults as possible.

      As far as current homeowners not being “personally affected” how about all of those folks who lost equity, could not move to take a new job because they could not sell their home, etc.? Almost anyone with a house – with or without a mortgage – has been personally affected by this crisis.

      It amazes me that the “vast majority” bought – and continues to buy – the propaganda spewed by the banks that it was the subprime borrowers, people who bought too much house, deadbeats and strategic defaulters who caused this crisis. Almost everyone knows someone who has lost their home the last several years. Many had their homes stolen from them, others lost their house as a result of the financial crisis (lost job, etc.).

      Burn down the OCC? I would like to volunteer all of the correspondence I’ve received from them the last few years to start the fire.

    4. Yves Smith Post author

      Please go read my ebook on the IFR and then we might have an intelligent conversation. The OCC’s own numbers indicate that as many as 30% might have been harmed, and this is despite the credulity- straining efforts NOT to find harm reported by 9 whistleblowers.

    5. rob

      You may hate banks,but to say not very many people were harmed is a rediculous statement.
      Besides the people who were personally affected by illegal forclosures,and the rest.Everyone who has been living for the past five years was hurt by this scandal.People whose home equities have plummeted.People who have found jobs scarce,or at best are underpaid by the destruction of the economy, by these bums.The rot that was created by falsely inflating prices, and securitizing mortgages, and creating herds of mortgage brokers to “market” all that money to everyone,….which then turned into the shorting of the doom which came, and still they took.The money that was paid to prop up all these insolvent banks, and their phoney deal,is money not being spent on something productive..Then there is every person who actually tried to buy any real commodity at the time which was also rediculously inflated.Everyone Was screwed by the system of schmucks we have running the shows.And everyone alive is dealing with the carnage in one form or another.The ones who don’t feel it , probably are benefitting in some way from this corrupt system, and then are”part of the problem”.

    6. GuyFawkesLives


      If I could only spit in your face for making that comment.

      1. kalene

        well i dont know where you live but where i am and what i seen and read and what i been through dont even go there

  7. Susan the other

    I wonder how much of this is a stalling tactic and to what end. If the Fed bought up every last MBS at full value, even the ones stashed away in Maiden Lane, would the original investors be paid off? Would the Fed, or the private banking cartel, or the taxpayer be the new owners of these mortgages? And what good does it do anyone that the Fed buys this crap if the titles remain so screwed up they are no longer negotiable? The Fed is not the Emperor. It cannot decree that the problem has been solved just because the mortgages are stuffed away in its vaults. Those mortgages have been used to create trillions in derivatives. So don’t invalid titles trash all those derivatives? Forget that the banks can’t prove standing to foreclose, or even to collect payments, because that’s a small thing compared to a mountain of null and void derivative contracts. And where is MERS in this investigation?

    1. Yves Smith Post author

      No one is disputing that Obama could fire DeMarco.

      The issue is whether he can get a replacement confirmed by the Senate. Recess appointments have been nixed by an appeals court in a sweeping ruling. If not, a deputy director becomes acting director. All four are on the same page as DeMarco.

      Failure to mention this wee issue is a sign of lack of honesty.

  8. Rebecca Lara

    This is correct to me I can and have the proof I did nothing wrong unless you blame being human. Not having the knowledge being ignorate to understanding banking laws rules mortgage not to say yet foreclosure wrongs that ended with fraud. My own foreclosure after 22 years not missing payment 2007 to march 17 2010. They started my foreclosure as I was told prior being late? Then who knew about reinstatement quote. That some where do the line they tossed subsatution of trustees not notifing and these had Mers falsify docs robo sign not signed dates that were in future I myself single older adult 53 at lockout march 29 2011 they put me out to pasture when Obama state of union may 2010 said this 15 billion for 4 states one mine ca was to keep the American dream alive. Unemployment was high many who lived in homes years who had the dream were to get help this was for us who had bad Finanical hardships on social security SSI disability unemployed stay in our homes keeping our American dream alive
    Only we were not qualified for any of this could not even find this program
    I tried over and over a year doing this that what ever asked plus even HUD approved my loan was secured by HUD 1 HUD 1a fanny Freddy NHSA I did NHSIE this they didn’t know either what they were doing or they would of found the errors wrong doings unfair practices truth in lending who thought of this 2009 2010 no one wanted to even look hear it
    I’m upset because I wasn’t trying or asking for a free home I been disabled PTSD mobility issues late 90’s through years it got worse and top it off single mom of two had her empty nest with in a month I was grieving Australia is half way around the world three months later after lender telling me renters I had they said I did not these renters caused more pain loss for myself. My own congressman office laughed as I cried telling me the banks are not going to give you money why they want the houses this was right after state of union may 2010 joking laughing how I’d be foreclosed all alone no help out in streets homeless. They knew what was planed well Southern California knew Naca even tried twice for forbearance only they wouldn’t budge they wanted my home no ands if about this they even told me fanny owned no Freddy no sorry out of country you’ll never know jan 2011 in Los Angeles making home affordable joke also all were untrue the poor limited income Americans got tossed out no help I seen just as I then comes tri party loan what equity loan paid off my home loan of 57,000 dollars I forgot divorce after 11 years 1995 then 1998 judge ordered clerk of court to sign him off. Granting me exclusive grant deed I took to hall of records they were to file I have docs receipt note what ever
    Well march 2006 this was finally completed along with adding son as trustee and a lean on home judge ordered my name to of been taken off granting the total lean amount to his name ! Only someone did not do their job jobs right how do you get tri party loan when you pay off even receive paid in full with original grant deed note that I filed keep
    I forgot this. I have what they say they do. They now change everything how tracking done this that anything that they can not to be charged of these crimes lies fraud my own case has more fraud every place you can imagion and it gets worse from lockout march 29 2011 I been living in out of my car lost displaced confused to day I want to go home I been to and back 5 counties looking for housing help told 4 years to wait why because they must pull from 2005 07 off list first no matter if they have roof over heads they get. I lose I lost every thing I’m dead it kills me each day why where how. Promonoty contacted me IFR contacted me my justice was to of been served 2012 feb these papers were to of been in then they kept changing I can tell you much wrong doings many different times told forward fraud to Russ conceltents I hate today I’m stuck I have no one I’m alone been scared to death discriminated against predatory loan quite title that I didn’t know this term and many others nor did I present my words right in their way I should of understand PTSD I have hard enough time trying to get out articulate myself. No one called me asked me for any of my docs info and some how my case became sealed possibly even tossed out see I’m poor I can’t couldn’t afford a lawyer if anything I wanted a fresh face just out of school passed the bar to help me they stole my home I’m ignorant to knowdlege understanding what how when. This was IFR they were to find these and serve justice to us not the other way come on America you have became a sorry place I was taught to be proud told how America has help if one would ever need only born raised I saw got turned away my income too low SSI disability my body deterated these last 6 months this kills me 55 I’m not ready to lose my independence. Or dignity yet sorry America you already let me down one of your own how many others are their out there as I
    You give every other non American why did you treat your own so very wrong how sad this country became displaced by government action
    Lost confused I owned my home was just completed so I did not need to stress any more as I did for years they sold my home honestly its my home
    Cash for keys ended being bank rep at lockout
    Go my story goes on and on too much happened why I fought and fought still am fighting its called the principal of the matter it was not right there was something wrong only I found out these past three years there was fraud after fraud lies crimes

    1. down2long

      You have every reason to be furious. As are many of us who have been defrauded by this kleptocracy. I am sorry you have been through this.

    2. Kristi Kerby

      be healed from the mental torment that you have endured through the years & god grant you with a warm place to call home before the sun goes down in this very day. I speak blessings & financial prosperity over you & ask all these things for you, in Jesus precious name!

  9. Jackrabbit

    As poster child for incompetence and industry capture, the OCC almost does a public service in highlighting the political corruption that allows this to go on.

    Our regulatory systems are not designed for highly concentrated industries like financial services, energy, pharmaceuticals, etc. And the obvious failings have not been fixed because our political system is designed for efficient influence, not Democracy.

    Tammany Hall on the Potomac
    According to Tweed biographer Kenneth D. Ackerman:

    It’s hard not to admire the skill behind Tweed’s system … The Tweed ring at its height was an engineering marvel, strong and solid, strategically deployed to control key power points: the courts, the legislature, the treasury and the ballot box. Its frauds had a grandeur of scale and an elegance of structure: money-laundering, profit sharing and organization.

  10. down2long

    Don’t know if any of you saw this, but Sen. Barbara Boxer, our Israeli senator, did actually send a letter to the $25 billion settlement administrator. She asserts (surprise) that the banks are not complying with their agreements per that settlement. (DUH!) It was in the Saturday L.A. Times. Will try to get the link, but my linky goodness skills are sadly limited.

    1. Massinissa

      “Our Israeli senator”

      We should just make Israel a state already. They already have more representation in our congress than most states do anyway.

  11. igata

    Why aren’t the judges doing anything about this foreclosure fraud?

    Did anyone look into when Countrywide started Recontrust (the foreclosure dept) it actually stood for “Con” or “trick” the trust AGAIN IN OTHER WORDS “RE” “CON” THE “TRUST” “Recontrust”. This is now owned and operated by Bank of America. Why hasn’t anyone looked into the amount of fraud in these securities and amount of fraud in foreclosures?

    1. down2long

      My new Federal Bankruptcy Judge here in Los Angeles, Sandra L. Klein, came for the U.S. Trustee where she had investigated fraud in the bankruptcy process for ten years.

      Now she’s a judge, and she never finds for the debtors, because as everyone knows, all fraud is comitted by debtors.

      In my case, I had two banks that were refusing my bk-court ordered payments, and proceeding to within hours of trustee sales several times.

      “Judge” Klein simply couldn’t be bothered with this bank malfeasance. She did, I grant her, issue an injunction to halt one sale, but after that, she just kept throwing procedural book at me, even though I had paid off all my creditors a year early, and had complied completely with my reoganization plan, i.e. she will not grant me discharge, because she knew I was trying to get a stay to save a building. (I don’t know when I would ever get a discharge. I stopped going to “court” after my settlement, because I refused to consider this a “court” in any real sense of the word. Klein finally dismissed my case, without discharging, allowing me to proceed to state court with my complaint against Wells Fargo for breach of contract for refusing my court ordered payments for more than two years, and refusal to accept the court ordered “crramdown.”

      I did reach an out of court settlement (finally) against Deutsche, after five years.

      The ninth circuit, in appointing Klein, sang of her “wide range of bk experience.” What a laugh,these people kill me.

      So, in answer to your question, don’t look to the courts pay any attention to bank fraud, with rare exceptions. (See Judge Elizabeth Magner in LA.)

      1. down2long

        Klein is so adamantly prejudiced against debtors that I actually felt I couldn’t ask for my case to be closed – not dismissed – as I stated above, because it is clear in her court that almost all debtor requests are refused.

        Klein also only holds court twice a week, which is unheard of, and she will only hear requests for dismissal, etc. once a month. To someone who is dire straights, these timelines are onerous.]
        She also refuses to rule from the bench in debtor requests. She insists you file all requests in writing, notifying all parties etc., etc.

        However the refusal to rule from the bench does not pertain to banster requests. While I was in court she kept granting all bankster requests, In one case, a debtor’s lawyer was trying to proceed as to value of the collatoral. They were on their third appearance in court, the bank was contesting the valuation.

        This time, the bank had “overlooked” getting a sig from the appraiser. Despite objections from debtor’s counsel that these appearance were prohibitively expensive for the debtor, and that the bank was clearly dragging its feet to runup the debtor’s bill, the judge granted a fourth extension, and ordered everyone back in court in ten days.

        She should be a bank darling, but interestingly, overrules voluntary settlements between banks and debtors, so she is pretty reviled from both sides of the aisle, but obviously more from the debtors’ bar. In one case my lawyer saw, the bank and debtor had reached a settlement to let the debtor keep the property, subject to the settlement. Judge Klein overruled the settlement, insisting the bank take back the property. What a piece of work she is!!!! Thinks she’s Judge Judy and that this is a court of punishment, not reorganization.

        She had literally caused me to have waves of nausea to flow over me. She is reprehensible.

  12. Everythings Jake

    This (as with other articles of wrongdoing) make me angry, but this one in particular shows me how wrong I’ve been to believe that the facts will somehow matter. It’s clear that that the lying cheats from the OCC and the Fed simply don’t care. Like the slap-on-the-wrist fine issued to HSBC for laundering hundreds of billions of dollars in drug money, a few hours of discomfort in front of a congressional subcommittee is simply the cost of doing business.

    I still of course can’t give up my sense that getting at the truth is important, but it’s not in and of itself sufficient. How communities don’t simply take a torch to the “payroll loan” companies in their midst is completely beyond me. And that’s real, overt and in-your-face financial rape. Fixing this? Until Eric Holder, Lanny Breuer and frankly, Obama himself, are behind bars where they belong, this isn’t going to change in any way shape or form.

    And very possibly and unfortunately, until the likes of Dimon, Blankfein and their families have their heads in a guillotine, the sociopaths will not stop. Those who make peaceful revolution impossible…

    1. belinda crawford

      well well it’s april 15, 2013 and i called rust consulting to see what is taking so long with the money i think they are lying saying checks went out april 12. 2013 the checks are suppose to be coming from faribault minnessota i looked on-line and if it’s priority shipping that would take approximatley 2 to 7 days. the guy on the phone said 1.4 million checks went out on april 12, 2013 they said well we don’t see that yours went out yet, what kind of crap is that? they are stalling on purpose holding up that money. you can also go on-line http://www.rust consulting .com and call one of the offices and talk to someone they might talk to you or they might give you the run a round.

  13. Dee

    OK, a naif is delurking here. What ever happened to the truism that “The bank doesn’t want your house. They want you to make payments”? Is land in such short supply that outright theft is rational? Or what?

    As a data point, I just spent a month proving to PNC that “their” property, where I have lived for some number of years, is fully insured. The game stopped just short of my threatening to hire an RE attorney to demonstrate insurance coverage AND do a full chain of title search.

    1. Yves Smith Post author

      In the old days, the banks owned the loans. They’d typically do worse in a foreclosure than a modification because they would eat the costs of the foreclosure + any loss on the sale of the house.

      Now most “banks” are originators and servicers. When a borrower is late (or is made late) they get to charge lots of extra fees. Foreclosing is attractive to them economically. They do NOT get extra fees to modify loans.

      And the cost of foreclosure (attorney’s fees, etc) and loss on the sale of the house comes from the investors, not the banks.

  14. c campbell

    Well, I received my check today…. $600.00. I guess they didn’t review my mortgage/foreclosure paperwork.

  15. ll

    I got my foreclosure check today. I applied for review so the worst case I would get $500. I ended up with $300.

    Obviously, they still can’t get it right.

    Very disappointed and tired.

  16. Bill

    What a joke! I just got my check today and boy no thank youfor the f@#king $500.00. Obama and the rest of the Assholes from Washington can suck my dick!!! U all are going to burn in Hell……..

  17. ericmcquare


    The banks cannot even mail the checks to the right address. My office just received a check for an individual that we have never heard of before. Right now I am 20 minutes into a call trying to see how I get it back to them so that they can send it to the correct address. If you want a scan of what was included so that you can see what the accompanying material says shoot me an email and I will scan and email it to you.

    1. Felix

      I am interested in seeing the document you received. Yes I am waiting for a check.
      Thanks alot

  18. Krista

    I am so disappointed in the American government. Hello, it starts with all of you not just Obama. If this country wants to survive, everyone needs to work together to get the job done. If you are a person who works in the goverment and you sleep at night while letting people lose their jobs and homes greed is worth it right? Independent Forecloser review is a joke; who is deciding this? I got my check and it wasn’t a good thing. I feel like I got slapped in the face; it was a waste of time to even fill out the papers. I dont think anyone actually knows how things went in my loan. I’m not really sure why the government lets companies take advantage of people that keep them supplied with money. If we would all revert back to times when our grandparents were growing up or parents things would be ok. Even when I was a kid this country was great. My family and genrations before have fought for the united states! What is the problem? Why are things falling apart? I have lived in the same area since kindergarten and none of the buildings have any buisness in them, it’s very scary for me. Question, what are we doing about this? We need a team to fix what has gone wrong and hello! If you run a buisness in America you pay the taxes due like the rest of us. That really makes me angry to see some one make millions off an idea then want to not have to pay taxes. Stuff like that is wrong especially when people are starving.

    1. Carla

      Here is what is wrong: over the last 150 years, corporations have gone to court and gradually gained many of the Constitutional rights that were intended for human beings. This led to what we now call Corporate Personhood. Then in a 1976 case, Buckley v. Valeo, the Supreme Court determined that money is equivalent to speech. Therefore, restricting the expenditure of money on campaigns is against the First Amendment right to free speech.

      These two things together created pretty much a perfect storm that has enabled artificial entities called corporations, and the very wealthy people who control them, together with the best state and federal legislators money could buy, to completely gut any pretence of regulation and make a mockery of the law.

      If you believe that Corporations are not People and Money is not Speech, go to, find the section on local affiliates, and see what you can do in your community to support an amendment to the U.S. Constitution that will end the fictions of corporate personhood and money being entitled to First Amendment protection.

    2. just me

      “I feel like I got slapped in the face; it was a waste of time to even fill out the papers. I dont think anyone actually knows how things went in my loan.”

      from the hearing:

      Sen. Warren: But the question is not getting cash to them, 300 dollars, the question is getting the right amount of cash to the right people, the people who are the victims of illegal activities of the banks. Is that right?

      Mr. Ashton, Fed: So, the settlement agreement is not based on findings of individual injury. It’s a different approach. So we gave up looking for individual injury and decided –

  19. 7Towers

    I also received a check today, I submitted IFR paperwork for Wells Crooko,. They withdrew all offers of automatic 2MP modify. Denied me for the reason being that my husband no longer lived here so they considered the property “not owner occuppied.” I live here with my 2 kids. The mortgage was written off in a judgement with me still owing a lein.
    My compensation for the nightmare of this totally corrupt evil bank is 800.00.

  20. Sleeper

    Folks the following completely cynical point of view is not meant to belittle or otherwise make fun of those who have suffered real harm. My heart goes out to them.

    I think that your rightful fury is a little misplaced however. I think the real point of the settlement and the “reviews” were designed to kick the can down the road a little further or at least past the election.

    This issue was gaining real traction and had the potential to ruin the reelection for many people.

    And as far as judges go, it is common to sell future decisions for appointments. Note the arbitration judge who was appointed by Chris Dodd and his wife whos always finds for the bank.
    Or Clarance Thomas who never asks any questions because he already knows how to vote.

    1. Carla

      And speaking of Clarence Thomas, there’s a new documentary out about Anita Hill, who testified about Thomas’ sexual harassment of her before the Senate Judiciary Committee, and the true character of one of the Supremes. Even for those of us who remember her televised testimony well, it’s revealing and informative. The film is called “Anita.”

  21. Robin

    Apparently if you eventually signed a deed in lieu of foreclosure then the IFR or Wells Fargo or whoever assigned categories considers this to be a rescinded foreclosure. At least thats all I can make out from the amount of the check we got. Amount only shows up in either the rescinded column or the one for ongoing. We felt we had no option but to sign a deed in lieu three years ago. Apparently we should have just let it complete the foreclosure process! Interesting, very interesting.

  22. EyeInTheSky

    Well, I received my check and it was what I expected of $6000. I did submit a review WAY back then. I was denied the loan mod when I did qualify for it and Wells Crooks butchered it and forced us into the losing of our first house. I can finally leave this IFR following and move into the National Settlement for Illinois and expect my at least $840.00 from them sometime this Spring/Summer.

    I just hope the gov makes it right for where the lost money should go to and maybe we get more down the road.

    Good luck and God bless you all!

    1. Laura TM

      Thanks for posting this. I’m curious as to why the state a.g. settlement checks are taking so long to be sent out. Has anyone found out a date for when they are to be mailed?

      1. EyeInTheSky

        My guess is they were waiting on the IFR to finalize or wrap up. They also might offset the payout just done or they just hanging onto the money to make money on our money, like they always do! Dont know but I am monitoring this one as well!

  23. EyeInTheSky

    Any info on your end about the National Settlement that the AG for the States to be taking care of? Be nice to see a article on this as well? What changes to occur now as I thought the IFR was to offset from the AG payout…but since the settlement happened, what they going to do…and do we get our interest on that money being held up?

  24. RoseMary

    I hope Senator Warren can help, from what I have read in other articles’ comments, several people have received checks and most are only $300. if this isn’t bad enough, the checks don’t cash; insufficient funds! So now what? We need help from someone. Consultants are getting hundreds of thousand dollars for doing the reviews, but we can’t get the money that our homes were worth.

  25. Larry Kent Ward

    I survive Three War Zones (special Ops US Navy 1983-1985) I was and am willing to die for our way of life. The bank foreclosed my home knowing Congressman Bobby Scott/Staff was helping to saved my home. I was approved Disability two months after foreclosure. Now I find out that regulators is being paid millions $$$ by the banks for settling quickly for bread crumbs $ for us foreclosed homeowners…God Bless America! God Help Us foreclosed Homeowners! Banks Please do the right thing!

  26. Julian

    I received my 2k check today. non descript envelope, could have passed for junk mail if you didnt know what you were looking for. I was denied a mod like 3 times. when i believe i should have gotten one.

  27. farang

    Seems to my feeble mind if you have systemic rot in a system…you create a new system and let the old one shrivel and dry up.

    If I had a retail outlet, I’d certainly be overjoyed to take old US silver currency in lieu of the Fed’s “Reserve Note” paper. Or for my services/goods. That’s just an example.

    In other words, debating and placing blame is passe and boring, useless, and wasted when what is needed are fresh ideas of creating a totally new system.

    Ideas to be implemented by those that understand the less “educated” will eventually tag along….but at first, we struggle, paddling upstream.

    But once we get there, those that committed Fraud, and enabled it, take the place of the pot smokers and petty thieves rotting in state and federal prisons…newly employed as guards over said Con artists.

    Myself…I have $62 million new reasons to want to place striped suit on Blankiepoo. We’ll pay him a nickel an hour to shine shoes of newly released Gitmo inmates.

    Gotta start somewhere, sometime, and quit this talking….yeah, of course “good on ya” Liz Warren…but I keep hearing you state your unequivocal support for the criminal state of Israel….I can take you seriously on anything else? No, I cannot.

  28. A Town-Down

    I lost my home because of mortgage crook Lee Farkas CEO and President of Taylor Bean and Whitaker. He went to prison and BoA assumed his mortgages. BoA sued the FDIC because TB&W fraudulent loans and were awarded money yet BoA did not help any of his victims and millions of people lost there homes.
    There is some much fraud and cover ups going on all involved should be in prison. It saddens me to see how many people are homeless because of this massive fraud.

    I just received a check today from IFR.800.00 what kick in the stomach! That did not begin to cover my relocation fees not to mention how hard it was to find a place because I now have a fraudulent foreclose on my credit from a bank I never had a loan with in the first place.

  29. Terry Bible

    I think the Banks and the Occ and The Federal Reserve should be ASHAMED at the way this was handled and do hope
    Sen Warren and Sen Brown have more enforcement actions against these entities for the protection of the American People

  30. kalene

    going to foreclose on us in may still struggling now i have to deal with ocwen in stead of litton there will never be justice mortigage compancy are all theives and i believe that most of the one that were failure had a woman working as the main person gives us a bad name one step back for wemon

  31. Kristi Kerby

    I am one of the ones that Bank of America screwed in this settlement. I received $600, when I should have received $50,000. I had fulfilled my written agreement and they told me to continue paying on my pre modification at the same I’m out and tell I received my paperwork for modification. I never received my paperwork for modification and when I called in to make a payment on April 1st of 2010, an employee did something in the computer, and it sent me into foreclosure. they took my home on October 5th of 2010 and sold it. I fell into the 7th category: on their settlement agreement and theylied and put me in the wrong category and gave me $600. what a complete slap in the face. the OCC did not do their job and I felt great not once but twice by the banks justice was not served

  32. Kristi Kerby

    continuation from previous message. I didn’t feel great I felt like I wrong all over again

  33. Gail

    BFrom Kansas, received $6k today from HSBC, wrong category of course, but feel blessed I received more than the majority of us who lost their homes to these greedy a**hole crooks. Completed IFR forms in early 2012, last name begins with A. I was in Forebarence plan when forclosed on.

    PASS IT ON….new whitehouse petition demanding reevaluation of IFR…..and OCC and Fed reserve’s role. Need 150 signatures before it will be moved to main site, PLEASE SIGN! We need all the publicity we can get! Link below:

  34. Caitlyn Laidlaw

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