April 28, 2017

GAO Study Finds OCC Foreclosure Review too Hard for Us to Understand


Apparently, the Government Accountability Office (“GAO”) has been studying the possible reasons why so few victims of foreclosure in 2009 and 2010 chose to submit their cases for review by the Office of the Comptroller of the Currency (“OCC”) as part of the regulator’s Independent Foreclosure Review process.

 

The GAO’s report, released earlier this month concluded that the OCC simply made submitting a complaint too difficult for us to understand.  We couldn’t figure it out.   It was over our collective heads.  And so, completely befuddled by the instructions, we didn’t participate in their Independent Foreclosure Review process. Don’t you hate it when that happens?

 

According to the Alan Zibel of the Wall Street Journal

 

An outreach letter sent to consumers, a website and a form needed to request a review were “written above the average reading level of the U.S. population, indicating that they may be too complex to be widely understood,” the GAO found. Without those details, “borrowers may not be motivated to participate,” the report said.

 

Now, I know that I are just a dumb blogger, but it seemed to me that all of them homeowners that I talk on about the OCC’s Independent Foreclosure Review seemed to understand the letter they received, they all were able to find the Website, and I don’t recall hearing from anyone overcome by the complexity of the form itself.

 

So, I decided to make some calls to a few of my readers to see if I had missed something.  The first person I reached was Warren Peace of Paris, Texas.  And so I asked him…

 

“So, Warren… did you receive a letter some months ago from the OCC inviting you to submit your case to the agencies Independent Foreclosure Review process?”

“Huh?”

“A letter… from the OCC… inviting you to submit the facts of your foreclosure to their review process?  Did you get one?”

“When, Tuesday?”

“No, not Tuesday… earlier this year… or late last year… a letter would have come addressed to you telling you that you could submit the facts about your foreclosure to the OCC’s Independent Foreclosure Review… and that you could receive money if your facts dictated that you should.”

“In my mail?”

“Right, Warren… it would have come in your mail.  From the OCC… like something from a government agency.”

“When, Tuesday?”

“No, not Tuesday Warren… it has nothing to do with Tuesday.  It would have come late last year.  About your house that was lost to foreclosure.  A letter.”

“In my mail?”

“Yes, Warren… I’m wondering about a letter you should have received in your mail.”

“When, Tuesday?”

“Okay, thanks Warren.  I’ll call you again soon, okay?  You take care.  Bye-bye.”

“Warren out.”

“Yes, that’s very funny Warren… I’ve gotta’ go…”

“I’ll go check my mail now.  If I see the letter from the CCCC, I’ll be in foreclosure.”

“Okay Warren… bye now.”

 

Well, on the other hand, maybe the GAO was right, I thought to myself.  But one call couldn’t be considered conclusive, so I dialed again.  This time it was Bonnie Ann Clyde, from Barrow Bay, Georgia who answered the phone.

 

“Hi, Bonnie.  How are you?”

“Mandelmans!  Why is you callin’ me?  I must be lucky.”

“Bonnie, you are lucky… do you remember the OCC Independent Foreclosure Review process announced last year?”

“Shoot yeah.  ‘Course I do.  Who would forget that?  I read your testicles every day.”

“Um… you mean my articles.”

“Which ones?”

“No, I was just saying, you said… never mind.  So, do you remember the letter the OCC sent out to invite you to submit a complaint about your foreclosure for the review process?”

“Yeah, I remember it… do you want me to find it now?  Hold on…”

“No, wait… Bonnie… Bonnie… no, you don’t have to go find… Bonnie!  Oh no.  She’s gone isn’t she?  Yoohoo… Bonnie!  This is truly unbelievable.  BONNIE!  Oh, this is too much… bye Bonnie.”

 

So, admittedly it wasn’t going well.  But I wasn’t about to give up… third time’s a charm, right?  So, I dialed once more… this time was destined to be better… how could it be worse?  And then the phone answered…

 

 “Hi.”

“Oh, hi… are your mommy or daddy home?”

 “No.”

“Do you know when they’ll be home?”

“No.”

“Are you home all alone?”

“Yes.”

“How old are you?”

“Seven and three-quarters.”

“And you’re home all by yourself?”

“Yes.  Are you a child predator?”

“Oh my God… no I’m not a child predator.  Why would you say that?”

“I don’t know, you just sounded like you might be one.”

“How do you know what a child predator sounds like?”

“I watch Chris Hansen on Dateline.”

“Oh my God, and your parents let you watch that show?”

“Sure… all the time.  In fact, I’m recording you right now.  YOU’RE BUSTED DUDE.”

“No, I’m not.  I’m not even calling to talk to you, I want to talk to your parents.”

“Do you want to spank me?”

“What?  No, I don’t want to spank you.  What are you…?”

“Do you want to cuddle with me?”

“Oh my God, I’m hanging up now… you’re a sick little kid, you know that?”

“Do you want to touch my…. CLICK.”

 

Okay, so maybe this calling around idea wasn’t the best one I’ve ever had.

 

My point was that the OCC’s letter, Website, and form couldn’t have been so terribly complicated that it prevented people from submitting their complaints to the review process.  There had to be other factors that led to submissions being so low.

 

So, I found a copy of the OCC’s submission form.  Now we would see just how hard it was to deal with that darn form.  Okay, here we go…

 

Section 3.

 

1. Was this property your primary residence?     YES

 

2. Were you under bankruptcy protection or waiting for the final ruling on your bankruptcy case when the foreclosure action happened?

(Hmmm… maybe I’ll come back to that one.)

 

3. Do you believe that the mortgage balance amount at the time of the foreclosure action was more than the amount you actually owed on the mortgage?

HOW WOULD I KNOW?

 

4. Do you believe that the foreclosure action was pursued because your mortgage payments were inaccurately processed or applied?       POSSIBLY

 

5. Do you believe you were protected by an insurance policy issued by the servicer or affiliate that would have made your payment in the event of unemployment, disability, or illness, but did not do so?       ASK MY SERVICER

 

6. Did you attempt through the court to have the decision to foreclose on your home reversed?   SORT OF

 

7. Do you believe you provided all the necessary documents required to obtain payment assistance or a mortgage modification before the foreclosure action occurred?  NOT SURE

 

8. Was a deficiency judgment obtained against you for an amount that included money that you should not have been required to pay?  ASK MY SERVICER

 

9. Do you believe you were making on-time monthly payments in the required dollar amount on your mortgage or an approved loan modification, trial modification, or payment plan, yet the foreclosure action still occurred?

YES & NO

 

10. Do you believe that you were denied a modification when you qualified under the applicable program rules?   WASN’T TOLD HOW TO QUALIFY MYSELF

 

 

How am I doing so far?  Not so good, right?  Okay, so maybe this isn’t working out the way I’d thought it would.  It’s all just so confusing and above my reading level.  I think I better sign up for some reading lessons and revisit this whole thing in a few months after I get through the fifth grade.

 

Then last month… a new desperation… I mean, development…

A chance to win $125,000!

 

So, last month, with response rates lower than most timeshare mailings, the OCC brought in the pros from Madison Ave. to help them “sell the product,” as it were, and next thing we all knew, the OCC’s Independent Foreclosure Review was transformed into an ad campaign indistinguishable from the campaign used by the state lottery.

 

I’m paraphrasing here, but if memory serves it was something to the effect of…

 

“Feeling defrauded?  Are you living in your parent’s basement at 52 years old? Robbed of everything in your life?  Considering a drug overdose for the holidays?  Well, if any of those thoughts have continued to cross your mind since 2009 or 2010, then you could be eligible to receive $125,000 from your bank!

That’s right… and don’t worry, because your bank will in turn be getting the money from American taxpayers just like you!  And all you have to do to win, is go online and fill out a form telling us just how badly your were defrauded back in 2009 or 2010 and we’ll take it from there.

And remember… you don’t need a lawyer.  So, whatever you do… don’t hire one.  In fact, don’t even talk to one about this even if you’re related to one.  Lawyers cannot help you in any way… so, why wait… apply today. 

The jackpot is now $125,000 and you can’t win if you don’t play the Fraudclosuregate game!”

 

I can’t remember exactly, but there may also have been mention of some lovely parting gifts as well.  I think some contestants were going to receive Rice-a-Roni, The San Francisco Treat… along with Lee Press-On Nails… For those long luxurious nails that last and last. 

 

So, getting back to the GAO study’s conclusions… the reason I don’t think it was the complicated nature of the letter, Website and form is that I think for $125,000, the remedial readers who were defrauded out of their homes would have turned to family members with more advanced reading comprehension skills for help.

 

However, the GAO’s conclusions are somewhat interesting, as the WSJ explained that they, echoed concerns raised over the past year by several Democratic lawmakers on Capitol Hill.”  And anytime you have the GAO and lawmakers on Capitol Hill reaching the same conclusion, I think you cannot ignore the possibility that they are right.

 

So, if the homeowners we’re talking about here were in fact reading at such a rudimentary level that they were unable to understand the OCC’s letter, Website and form, it would seem to me that they could not possibly have understood the loan documents they signed that put them in this mess in the first place.  In which case, what we have here is an entirely new ball of predatory shithead, wouldn’t you say?

 

So, which is it?  Did they know what they were signing and therefore borrowed irresponsibly and deserved to lose their homes?  Or, were they unable to read at a level that would have allowed them to understand what it was they were signing?  Did they gamble and lose, or were they raped for fun and profit?

 

Honestly, it’s all very confusing.

 

What shouldn’t be confusing in the least, however, is why so few homeowners chose to participate in the OCC’s Independent Foreclosure Review process.  That, my unenlightened friends at the GAO, is as they say… a no-brainer.

 

For the most part, homeowners chose to ignore the OCC’s so-called Independent Foreclosure Review because it was understood to be more of the same clandestine behavior from the most ineffective regulatory agency since the Klu Klux Klan was said to be protecting people.  What Moody’s was to ratings agencies, the OCC is to bank regulators.

 

Lucky for me, I covered the OCC’s announcement of its Independent Foreclosure Reviews at the time.  The title of my May 21, 2011 article was, and with good reason, “When Auditing Foreclosures, the OCC’s Definition of the Word “Thorough” is Apparently… “Hidden.”

 

Let me refresh your memory as to why I said what I did, in outline form…

 

  • The Consent Orders issued by federal banking regulators a few weeks back said that the country’s largest bank-servicers had to conduct “a thorough independent review” of their foreclosures.

 

  • The findings of the independent reviews will be… sealed… closed to the public… whatever the independent reviews uncover or determine will remain a well-publicized secret.

 

  • The independent auditors will determine if a given “mistake” resulted in financial damages.

 

  • The OCC also mandated the design and publication of a “consumer complaint review process.”  The idea is that borrowers who lost homes to foreclosure will now be able to complain to an independent auditor… who will do what?  Get their house back?  Send over a hooker?  What will the independent auditor do in response to a homeowner’s complaint?  Where’s the rest of that sentence?

 

Sorry, stuff like that makes me crazed.  How can they fail to finish a sent…

 

  • The OCC urged banks to build the consumer complaint process and channel for communication immediately… so whatever that means in terms completion… I wouldn’t have any idea.  In fact, truth be told, I don’t care when they start, I only care when they finish… and yet the OCC tells me the part of the story I couldn’t care less about… again.  Based on the information being provided, I’d peg the completion date as being sometime between this summer and… the end of time.

 

  • The OCC is saying that borrowers will be GUARANTEED a response from the auditors… and if they don’t get a response from the auditors as they were GUARANTEED… they get what?  Their home free and clear?  No, then what’s behind the OCC’s guarantee?  A gift certificate?  Movie tickets… come on, give them something.

 

  • The OCC is not disclosing the identities of the companies conducting the reviews.

 

  • Sheila Bair, now a short-timer as chair of the FDIC, argued in front of the Senate Banking Committee this past Friday for both “thoroughness and transparency” of these reviews.  Her point was well taken when she said that, “only credible and public reviews” would be accepted by the general public, and therefore allow the industry to go forward.

 

  • Kathleen Day, for the Center for Responsible Lending, said: “Unless they make that review process public, who is to believe it?  We’re supposed to take the banks’ and the OCC’s word on this?”

 

  • The OCC will have law firms reviewing issues such as whether the servicers had proper legal standing in foreclosure cases, and I’m sure these will be law firms that don’t represent banks or want to get future legal work from banks, right?  Or, not so much.  Why worry about it, it’s not like we’ll ever know one way or the other.

 

  • The auditing of fees and penalties assessed will go to PricewaterhouseCoopers LLP, Navigant Consulting Inc. and Promontory Financial Group LLC, which is funny because these companies are the same companies that were around when the failures in compliance were occurring… and are still occurring, so the question on everyone’s mind is whether the accounting firm can be credibly independent.  And I say, after Enron, and the like… why would anyone think they could?

 

  • I could care less about this entire exercise in futility because only regulators will know the results, so even if they try to present stats on how borrowers were improperly foreclosed upon, I can’t imagine anyone saying, “Oh, okay then,” and then leaving it at that.

 

  • David Dunn, a partner at the law firm Hogan Lovells, told American Banker: “Were there significant numbers of people who were subjected to foreclosures where they shouldn’t have been? We don’t know the answer to that.”

 

Well, that may be true, David, but that’s only because you’re a lazy and dishonest underachiever who hasn’t read a book since law school, right?

 

  • Only material errors will be eligible for redress, though the OCC has not yet determined how it would define such a benchmark.

 

  • Well… to wrap things up, I suppose I should say that with findings submitted directly to regulators, like the OCC, and not to the banks themselves, let alone to the public, I think this actually scores a bull’s eye as both the most insulting program design I have ever seen my government announce, and the most uncaring.

 

  • So, very well done, guys and gals in government… you have done it once again.  You have managed to take something of critical importance to millions and after spending time and money, transform it into something entirely worthless. You’ve really outdone yourselves and you should be quite proud.

 

  • And then let us not forget the “insider” that came forward to tell me about his experience working as an independent reviewer.  His story likely didn’t drive participation either.

 

So, GAO people… does that help clear things up for you at all as to why the level of participation in the OCC’s quasi-independent and entirely secretive foreclosure review might have been a tad on the low side of expectations.  Actually, that the OCC or anyone else in government actually thought that anyone at all would participate is a testament to just how out of touch you all are with your constituents.

 

I mean, at least you managed to get just under 200,000 to close their eyes and say, “There’s no place like home.” You should be happy that you didn’t end up with 20,000 or even 2,000.  I know, there were supposedly 4.5 million that were eligible, but I think the ratio is correct if you compare those that were supposed to be helped by HAMP with those that actually were.

 

You reap what you sow, GAO people, you reap what you sow.

 

And by the way… am I getting my message across here?  Please let me know because if my writing is taxing your reading abilities, I’m sure I can find a homeowner to help me dumb it down to your level.

 

Mandelman out.

 

P.S. And lest you think me entirely unsupportive, you should also know that I also wrote helpful things about the OCC’s promised process, as in “OCC’s Independent Foreclosure Review is Ready for Homeowners.”  You see, I try to help… it’s just that you make it so damn hard.

 

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