Plot Thickens Over Mystery 'Error Rates' of Foreclosure Reviews

Plot Thickens Over Mystery 'Error Rates' of Foreclosure Reviews
Sen. Robert Menendez, D-New Jersey.

There were no bank regulators at Wednesday’s second Senate hearing on “ensuring accountability and transparency in foreclosure reviews” – but there were other overseers seeking the true depth of mistakes by mortgage servicers, including a director from the Government Accountability Office (GAO).
The hearing came to an end with a somewhat surprising revelation from Lawrance L. Evans, director for Financial Markets and Community Investment at the GAO, which issued a scathing report April 4 on how badly bank regulators handled the Independent Foreclosure Review of more than a dozen servicers.
The IFR was scuttled in January in favor of a $9.3 billion settlement that is suppose to compensate 4 million wronged borrowers.
“Any information based on the IFR at this point should be deemed incomplete, and the data does not allow us to render any conclusions about error rates at a particular servicer or make comparisons across servicers, despite what’s been reported in the press,” Evans told Sen. Robert Menendez, D-New Jersey, who presided over the hearing for the Senate Committee on Banking, Housing & Urban Affairs.
The senator was trying to determine how regulators arrived at the various categories of wrongdoing and compensation amounts stemming from the mishandled foreclosures from 2009 and 2010. The IFR was launched in 2011 by the Office of the Comptroller of the Currency and the Federal Reserve.
“Since the OCC and the Federal Reserve abandoned the review, to what extent will they be able to further examine whether certain banks committed systematic errors in their foreclosures, based on either preliminary results or based on information that they gathered through regular bank examinations or other sources?” Menendez asked, drawing the response from Evans on error rates.
Similar questions are being asked by other lawmakers, consumer advocates, and the IFR’s eligible borrowers themselves who have started to receive payouts this week from the regulators’ paying agent, Rust Consulting.
But by abruptly ending the IFR, regulators have managed to isolate the very files that are in question.
Many borrowers are disputing the categories into which they were placed. But there is no appeal process in the IFR settlement. Payout recipients are left with the option of taking legal action against their former mortgage servicer. The payout framework released by regulators determines where borrowers are slotted in a sweeping range from $300 to $125,000. However, the vast majority of IFR borrowers are getting a few hundred dollars each.
Sen. Elizabeth Warren, D-Massachusetts, also a member of the Senate Committee on Banking, Housing and Urban Affairs, and Rep. Elijah E. Cummings, D-Maryland, ranking member of the House Committee on Oversight and Government Reform, have written the Fed and the OCC seeking the documents from the shelved reviews.
The regulators responded to Warren and Cummings, stating that releasing the documents could be interpreted as a waiver of their authority to withhold proprietary business information from the public.
At Wednesday’s hearing, Evans further explained the GAO’s predicament on this very same matter to Menendez:
“Now, the regulators could have additional information and additional judgments that may help them make decisions about safety and soundness and corrective actions, but at this point we haven’t done that type of work to determine what we know and whether it’s statistically valid,” Evans said.
“Is that information that would be accessible to you if we asked you and charged you to do that?” Menendez asked Evans.
Evans’ response did not leave much hope for those seeking the deepest findings of the IFR.
The GAO’s Evans: “As part of our ongoing review, we will start to look at those issues. We’re more than willing to discuss with your staff the protocols governing our audit documentation, including any legal or privacy considerations such as those concerning banking information or any agency determinations that might be relevant, but we will continue to do this work for you and to have conversations with your staff.”

6 thoughts on “Plot Thickens Over Mystery 'Error Rates' of Foreclosure Reviews

  • April 23, 2013 at 10:11 am

    Wells Fargo foreclosed on us, and did not even own the mortgage.
    I hired 3 different firms to try and work something out in the form of a
    Modification, Wells Fargo would not even discuss it.
    Then I ended up hiring 3 differ law firms to help file the Chapter 13
    All of these Firms were so busy raking in Huge profits from all the BK cases, that we could not even get one of them to do due diligence and file the correct papers.
    I spent over 20K on worthless Attorneys, we also filed every complaint under the sun and all of these Government agencies did NOTHING AT ALL, we never even received a reply from any of them.
    After all of this, I choose to become my Own Attorney Pro Se and straighten out the Chapter 13.
    This all took so much time, that even after being laid off in the worst depression on recent record, and being lucky enough to find something temporary 200 miles from home,.
    I also lost the temporary position after a year, as I was being summoned to court and harassed by Wells Fargo every other month.
    I finally negotiated a shotgun at my head modification with Wells Fargo, who refused to ever provide a single shred of any evidence that inflated my Mortgage by over 10,000.00.
    My new payments were higher than before, and this all cost me over 40,000.00 and surely took years off my life due to the stress and hassles.
    Now The FEDs and Bank Crooks want off the hook for a 1,000.00 per person with no disclosure at all.
    America, none of these crooks even went to jail; we were all ripped off BIG TIME.
    I Demand BETTER, and so should the rest of the Americans in this once great country.
    People need to be Jailed, Feds needs shut down.
    This is absolute BS, Call your Senators.

  • May 8, 2013 at 5:43 pm

    There are other blogs that people are upset over the same issues and there is nothing about the petition. So please try to find them and post this up for them I am sure they would sign it.

  • May 8, 2013 at 6:10 pm
    Permalink … 2013-05-08
    Rust Consulting, the paying agent for the Independent Foreclosure Review (IFR) Payment Agreement, said today that a clerical error led to some borrowers in the May 3, 2013, wave of payments being sent checks for less than the amount that the Federal Reserve directed those borrowers to be paid. Rust has corrected the error and plans to mail supplemental checks to affected borrowers as soon as May 17, 2013, for the additional amounts they were to be paid. A letter explaining the reason for the supplemental check will accompany the supplemental check.
    In the wave of settlement payments mailed on May 3, 2013, approximately 96,000 borrowers whose loans were serviced by Goldman Sachs (Litton Loan Servicing LP) and Morgan Stanley (Saxon Mortgage Services, Inc.) were affected by the error. The remaining borrowers mailed checks on May 3, 2013 were not affected by the error.
    The correct total payment amounts are listed on the Federal Reserve Board’s website at … 0429a1.pdf.

  • May 16, 2013 at 12:05 pm

    still waiting on check called rust consulting and was informed that i was included in the settment however no check, when called to determine the process for mailing out checks for bank of america, was told that you are included and if you do not get a check to call back in august…what a joke….website tells you what category you fall into but i am assuming in readingg some of the comments you are receiving what they have determined you should get, i too have signed the petition it looks like we still have a way to go.

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