1. Cummings, Tierney Urge Issa to Subpoena Documents from FHFA on Principal Reduction
2. Elijah Cummings | Oversight Committee Democrats Urge FHFA Director to Produce Documents on Principal Reduction
3. William C. Dudley, President of the Federal Reserve Bank of New York, Makes Strong Pitch for More Aggressive Housing Policies Including Targeted Principal Reduction Program

Steve's title was subtle, so in case anyone missed it, here are the materials on Public Citizen's website. The petition calls on the Federal Reserve and the Financial Stability Oversight Commission to use their authority under Dodd-Frank to break up Bank of America. (But still check out Steve's analysis on Dealbook!).

1. Asshat Alert | Rep. Joe Walsh Releases Statement on Heated Exchange at ‘Cup of Joe’ “Banks are not all to blame for this mess”
2. Create and Sign Petitions | We the People on WhiteHouse.gov
3. Cordray Urges Federal Reserve Not to Erode Consumer Rights

1. New York Fed Secretly Sells $7.014 Billion in Face Value of Maiden Lane II LLC Assets To Credit Suisse Without Public Auction
2. False Statements | Lender Processing Services Maiden Lane ABS 2008-1
3. Alan Grayson Schools P.J. O’Rourke on #OWS (VIDEO)

Saturday night, while I was searching around on iTunes for a podcast on the economy… (OMG, did I just say that out loud?  How sad is that?  Let’s just keep that part about Saturday night between us, okay?)

But, you know the deal, right?  I’ve been doing more and more podcasts and a lot of people really like them and I wanted to see how other podcasts are done in case there was something I could do better or add in, whatever.  In other words, I was checking to see if there were any ideas I could steal… LOL

So, I happen upon a podcast published a few days ago… January 13, 2012… available free on iTunes: NPR on the Economy.  The show’s host is David Green from Morning Edition, and his guest, David Wessell, is the Wall Street Journal’s Economics Editor, and the author of “In Fed We Trust: Ben Bernanke’s War on the Great Panic.”

The topic was the Federal Reserve and how Fed officials have been talking to congress about how our country’s economy can’t recover without the housing market, so I figured… perfect… it’s my favorite issue.  Green opens the show by saying:

“Lately, Federal Reserve officials have been focusing on housing… they’ve been out in public pushing measures they think will help the housing market.”

Have they now, I thought to myself.  How could I have missed the Fed doing that?

Green kicked the discussion into gear by broadly asking Wessell what the Fed is trying to do.  He replied that Fed officials have been saying in speeches and in a 26 page white paper that’s apparently been sent to congress recently, that one reason our economy isn’t doing better is that our housing market is not healing very fast.

I couldn’t help but wonder how that idea could possibly take up 26 pages, but then remembering that it was the Federal Reserve we were talking about, I figured that the first 25 pages were probably cherry-picked data points showing how well the economy is doing, with this tidbit about housing on page 26.

Wessell went on to point out that the President of the New York Fed recently said the following:

“… it was difficult to achieve economic recovery unless the ongoing weakness in housing was addressed,” and that the new President of the San Francisco Fed, John Williams, talked about a “housing depression.”

The “housing depression” phrase caught my attention, as I’m sure it did yours, but then I figured he probably used the phrase in the context of what we would avoid, thanks to the swift and decisive actions of the Fed.

You see, I’m not falling for another goofy “we’re going to save the housing market plan,” that turns out to be another voluntary refinancing program that Fannie and Freddie have already pronounced DOA, but that we won’t hear the abysmal results for until next year at this time.

According to Wessell the Fed is now saying that they’ve done what they can to get the economy working better, and that now the other areas of the government are going to have to pay attention to getting the housing and mortgage market going again.

Sort of a funny way to phrase things, don’t you think?  It sort of made it sound as if we’re supposed to believe that the last three years have been somehow planned the way sub-contractors work together when building a home… “Okay, Congress… we’ve got the framing up, the electrical wired and the slabs poured so you can go ahead with the tile, the window treatments and doors.”

Of course, the reality is that the last three years have looked and felt more like a scene out of Ringling Bros. Greatest Show on Earth, when something like 50 clowns all come rushing in from everywhere, ten of them get out of a tiny car, one gets shot from a cannon, and three monkeys in spandex start circling on bicycles while blowing noisemakers.

Wessell then tells Green that the Fed is now saying that “the alphabet soup of programs that the government has tried to help housing and homeowners isn’t doing enough.”  Green asks if they had any suggestions as to what should be done and Wessell sounds almost exuberant when he replies that yes, “they’ve come up with a list of things they think the government ought to do.”

At this point, the anticipation was practically killing me, and I thought I might pee my pants if I didn’t hear what the Fed had in mind soon.  It’s an election year, you see… and as such, anything is possible.  If you don’t think so, just consider that Obama, after presiding over an administration that pumped $16 trillion into financial sector, is again running as some sort of populist.

So, Green and Wessell then start listing the things the Fed presented to congress in its white paper ostensibly in order to heal the housing market and thereby remove the last standing impediment to beginning our march back to economic prosperity in earnest.

And please remember… in the third paragraph from the top of this article, I placed a link to the specific NPR podcast to which I’m referring, and the reader is encouraged to listen to it after reading what follows to confirm that I have faithfully reprinted what was said by Wessell… verbatim, as it were.

What the Fed told congress will be in bold type, my questions and comments will be plain text.  I really need everyone’s help here, because I think I may have discovered some sort of glitch in the space-time continuum that would explain why Washington appears so entirely out of touch with reality and the rest of the country, if not the world. Either that, or maybe they’re all just dumb and that’s why they wanted government jobs.

 1.    The Fed thinks the government “ought to find a way to reduce the glut of houses for sale, because the banks have taken over so many foreclosed houses there’s just a glut of supply and they’d like to make it easier for banks and others to rent them out in order to reduce the number for sale.”

1. First of all, why does the Fed think there’s a “glut of houses for sale?”  Did someone tell them that’s the case because I think that person may have just been pulling their little Feddy legs.  You see… there isn’t any sort of “glut” of homes on the market.  That’s why it’s called the “shadow inventory,” right?  If the homes were on the market and for sale, I think they’d just call it “the inventory,” and drop the whole “shadow” part.
2. Banks renting out homes does nothing to reduce the number of homes for sale.  Renting out a vacant home does reduce the number of vacant homes, but renting a home doesn’t preclude its owner from selling it.  So, if a home was on the market before it was rented, it’s likely still on the market after you rent it out.
3. The only ways that one could reduce the supply of homes for sale would be to: 1) Stop building new homes and listing them for sale. 2) Stop kicking people out of the ones they own.  3) Tear down the houses listed for sale. 4) Start promising doctors, lawyers, or other high income or net worth individuals that are citizens of foreign countries that if they move here, we’ll give them a new car and send their kids to Harvard for free.  5) Start giving away homes on game shows.
4. And there are no anti-renting statutes in this country that I could find.  In fact, in this country it’s really already very easy to rent something to someone assuming there’s someone who wants to and can rent it.  Maybe someone should introduce the Fed to Craig’s list.

More importantly, are we experiencing a shortage of homes that are available for rent?  I looked online for rentals in zip codes all over the country, and there were rental properties available in all of them.  I think today there are two reasons that many people don’t have a home of their own in which to live: a shortage of money… or the shortage of jobs that pay good money.

If the Fed is so concerned that a glut of homes for sale will derail any chance we have for recovery in our housing market going forward, which in turn will prevent our broader economic recovery, then why doesn’t the Fed’s list suggest that congress do something to prevent the 10.4 million foreclosures that will occur in the next few years, as forecasted by numerous industry experts whose predictions at this stage are based on hard data and mathematics.

CONCLUSION:

Recognizing that without recovery in our housing market our nation can’t sustain any sort of broader economic recovery, the Fed thinks congress should concentrate on reducing the glut of homes for sale… the glut that technically doesn’t exist yet… by making it easier to rent out repossessed homes?

That’s what we should do instead of doing something to prevent the 10.4 million new foreclosures that are certain to occur in the next few years?  The Federal Reserve wrote a white paper to the United States Congress saying that instead we need to address a glut of homes for sale that isn’t here yet by making it easier to rent out repossessed homes?

Read the two paragraphs under CONCLUSION again… slowly.  Now, would anyone care to explain that whole situation to me, because I find the whole thing terrifying.

2. The Fed thinks that “more should be done to make sure that the lenders, Fannie and Freddie and the federal banking regulators haven’t over-reacted to the crisis and are being too stingy and too picky about lending.”  According to Wessell: “The Fed actually said that if mortgages had been this hard to get over the past few decades, we MIGHT today be a nation of renters.”

• The Fed told congress that if people couldn’t get mortgages over the last few decades we MIGHT today be a nation of renters?  No mortgages available MIGHT have meant more renters?  The Fed is not sure that fewer mortgages being available would lead to more renters??  Okay, but I wonder what else MIGHT have occurred.Then, the Fed is UNSURE about why lending in this country is bordering on non-existent and they want Congress to do more to investigate whether there’s been an over-reaction among “picky and stingy” lenders?  Did I get that right?

  Aren’t the guys at the Federal Reserve supposed to understand the issues surrounding lending?  They are, right?

• The Fed has lowered rates to right around zero percent and pumped TRILLIONS into the financial system through all sorts of vehicles… and it hasn’t had any more sustained impact on lending than had they burned incense while chanting Hopi fertility prayers.
• Is it possible in anyone’s mind that the volume of lending available in this country is related to the degree of over-reaction on some sort of pickiness and stinginess index for bankers?
• Or could it be that a powerful wizard has cast a super glue spell on our nation so that no matter what amount of cash is pumped into our lenders, it sticks to the walls of their vaults and therefore can’t be lent out no matter what.

Isn’t it clear by now that the problem with lending in this country is NOT a LIQUIDITY problem and therefore it cannot be addressed through the use of MONETARY POLICY, of which the Fed is in charge?

You don’t need to be an “industry expert” to know what I’m saying here is true.  If it were a liquidity problem, then lowering the rates and pumping cash into the system would have worked and increased lending.  It didn’t, so, it’s not… get it?

One more time…

In this country, ever since the third or fourth quarter of 2007, the securitization market, credit markets, and secondary mortgage markets collapsed and froze solid when investors stopped trusting the credit ratings on mortgage-backed securities and CDOs.  Since then, lending in this country had to be effectively NATIONALIZED.

I say that lending has been NATIONALIZED because over the last three or four years, something north of 95% of the loans related to residential real estate were either Fannie, Freddie, FHA, Ginny, and… well, no that’s it, actually.

Remember when the Fed bought $1.5 trillion in mortgage-backed securities a few years back?   Do you understand WHY the Fed bought those mortgage-backed securities?  Because NO PRIVATE INVESTORS WOULD BUY THEM.  And why might that have been?  Anyone?  Anyone?  Come on now class… let’s not always see the same hands.

They don’t TRUST the securities anymore, very good class.  Why doesn’t the Fed remember any of this?  Or for that matter, the Economics Editor from the Wall Street Journal… to say nothing of the folks at NPR?

3.    According to Wessell, the Fed “is looking for alternatives to foreclosure, that if someone is not going to be able to pay their loan, and a lender is going to have to take it over, they’d like to find a way to speed the process up so it’s not so cumbersome.”

Okay, so the Fed is “looking for alternatives to foreclosure,” but what the Fed means by that is that they want the foreclosure process to be less “cumbersome?”  Less cumbersome than it is now?  Seriously?  What would that process look like, I’m curious to know?

I mean, now… in order to foreclose as a servicer, you don’t need much more than the relatively unsubstantiated claim that the borrower is not making their mortgage payments.  You don’t need to prove you’re the representative of the actual investor(s).  You don’t need to prove that the trust actually holds the note or that it was properly negotiated into the trust.   You can use a MERS assignment, even though it’s been established that the MERS database is often wrong.  You don’t need to show an unbroken chain of title.

In the non-judicial foreclosure states, you need even less, but my point is that you need so little to foreclose in either type of state that servicers have in numerous instances foreclosed on the wrong homes… yes, even with judicial oversight, the wrong home was foreclosed upon more than once or twice.

And, by the way, should you need any sort of paperwork to effectuate the foreclosure, is absolutely SOP to simply manufacture the documents and forge a signature or two… or three… a few hundred thousand times is fine.  Robo-signing is the norm, and I hear the forgeries are getting better, meaning they’re harder to detect.

Oh sure, Nevada has a new tougher law about these things, and other states are sniffing around the need to change things as well, but the Fed wants a “less cumbersome” foreclosure process?

So, what might such a process look like? 

Maybe the whole thing could be handled by phone or online?  That would probably cut down on the need for forged documents.  You could just call everything in.  The screen would just ask the foreclosing party a series of questions, like do you have the right to foreclose?  Yes.  Is this borrower in default?  Yes.  After one or two more questions, the servicer could just email the borrower the eviction notice.

That would be “less cumbersome.”

Look, 85% of homeowners go through the foreclosure process unrepresented by council… they just give up and leave.  Borrowers are not slowing the foreclosure process down or making it too burdensome.  Servicers are, in the vast majority of cases, and by vast I do mean almost all, able to mow down delinquent homeowners at will.

Last fall, I believe Treasury officials admitted that they thought HAMP a success because it slowed down the foreclosure process at a time when the banks couldn’t afford to take back that many homes.  That sentence speaks to accounting policy, and it’s why the banks haven’t taken more homes back to-date.  It’s not that the process is too cumbersome.

And I absolutely promise you… the Fed knows this intimately.

WRAP-UP…

After those stunningly brilliant and thought-leading insights, the host asked Wessell what the reaction from congress has been… and Wessell replied first by exclaiming what a good question that was.  I sounded like Wessell might have given Green a cookie, if he’d had one in his pocket.

Wessell then said the reaction has been “mixed,” and that Sen. Orin Hatch of Utah, a member of the powerful Senate Finance Committee, “sent a blistering letter to Bernanke saying that the Fed is treading on the turf of congress and the regulators and ought to back off and that he’s sure that the Fed wouldn’t appreciate a white paper from congress outlining how the Fed should be thinking about monetary policy.”

Ohhh, snap!

Wessell went on to explain…

“… some people think that this is putting pressure on the regulator of Fannie and Freddie… the FHFA… to do something more to help the housing market during an election season… the Fed says that’s not so.

 

Others say that maybe what the Fed is doing is giving the regulator some cover here by saying that the Fed thinks this is a good idea, it’s in the long-term interests of the taxpayer so we ought to do something here.”

 

Now, Wessell is talking about Ed DeMarco, the guy in charge of the FHFA, which is the conservator for the bankrupt Fannie and Freddie.  We’ve been over this with DeMarco in the past and he’s been very clear that his job is to protect Fannie and Freddie in the short run… period.

I want to be blunt here… whoever Wessell got either of those “insights” from… whichever nameless source… they’re both meaningless.

In fact, the whole podcast is meaningless, and that’s at some of its most useful moments.  What the heck is going on here?

How does the Fed write a white paper and present it to the United State Congress that is packed with proof positive of an entirely inadequate level of knowledge, understanding… education, even?  Am I going to find out that next week, the Fed sends congress a while paper about some issue from 4-5 years ago, and NPR treats it like it’s hot-off-the-press news again.

Is this evidence of a time warp of some design?  Am I on the Truman Show and none of this is real?  Are the politicians in D.C. that amateurish and obtuse?  Do our politicians simply not care, because so few of us pay any attention?  And what in the world happened to NPR?  Was that podcast produced for young children with Down Syndrome or some other physically or mentally impaired group?

I’m serious about this… I want to know how this podcast exists. It’s not 2008… are the people involved just that shallow as far as to their knowledge of the subject?  If you’re not with me here, I’d suggest you go back and read what was said slowly.  Or, better yet, go up to the third paragraph from the top and you can hear moron one and moron two do idiocy in harmony.

That was David Green on Morning Edition on National Public Radio with David Wessell, Economic Editor from the Wall Street Journal, who joins us regularly to talk about the economy…

Mandelman out.

Plus, Geithner's man-crush embarrasses ... the Fed?

Say, remember the great success of the first and second rounds of quantitative easing, the technical term for printing money?  If all you recall is increased inflation and a continuation of the economic stagnation of Obamanomics, well, you’re ahead of the Federal Reserve.  According to CNBC, the Fed will probably approve QE3, thanks in part [...]

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The Justice Department's project on access to justice has issued a report summarizing current research on state foreclosure mediation programs, calling for more funding and support.  The report offers an excellent summary of the best available research on foreclosure mediation programs, including the very successful Philadelphia and Connecticut programs, that have participation rates as high as 60% to 70% of defendants, and whose participants achieve settlements keeping them in their home in as much as half of the cases. 

The industry, led by federal bank regulator OCC and housing finance regulator FHFA, is promoting the idea that all foreclosures are hopeless, homeowners are using state law solely for the purpose of delay, and that massive foreclosures are inevitable, that most judicial foreclosures just result in default judgments, so let's get on with it.  The empirical evidence from states where adequate resources are applied, and mortgage companies are compelled to evaluate each and every homeowner with an income and a desire to pay, belies this myth. 

Justice now joins the Federal Reserve in advocating for fewer, not more, foreclosures.

1. Independent Foreclosure Review | OCC Says Independent Consultants Can’t Contact Borrowers
2. Fraudclosure | OCC Releases Public Service Ads About the “Independent” Foreclosure Review
3. Federal Reserve’s Independent Foreclosure Review and HAMP Escalations Review

1. Cordray Urges Federal Reserve Not to Erode Consumer Rights
2. Federal Reserve Board announces a formal enforcement action against the Goldman Sachs Group, Inc. and Goldman Sachs Bank USA
3. Federal Reserve issues enforcement actions related to deficient practices in residential mortgage loan servicing and foreclosure processing

I had the privilege today of hearing Federal Reserve Board Governor Sarah Bloom Raskin deliver the keynote address to the Section on Financial Institutions at the American Association of Law Schools Annual Meeting.  Governor Bloom Raskin's topic: mortgage servicing, which is not something the Fed has previously addressed.  I strongly commend her speech to you. It's rare to see a bank regulator invoke Shakespeare to great effect, as she does, but it's much more important for some of the other things she says:

This wave of foreclosures is one of the factors hindering a rapid recovery in the economy. Traditionally, the housing sector, buoyed by low interest rates and pent-up demand, has played an important role in propelling economic recoveries. The increase in housing sales and construction often is accompanied by purchases of complementary goods, like furniture and appliances, which magnify the effect of the housing recovery.

However, six years after house prices first began to fall, the pace of the economic recovery remains slow. Nationally, house prices have fallen by nearly one-third since their peak in the first quarter of 2006, and total homeowners' equity in the United States has shrunk by more than one-half--a loss of more than $7 trillion. The drop in house prices has had far-reaching effects on families, neighborhoods, small businesses, and the economy, in part because so many American families--more than 65 percent--own their homes. The fall in house prices has caused families to cut back on their spending and has prevented them from using their home equity to fund education expenses or start small businesses. The decline in house prices has also impeded families from benefiting from the historically low level of interest rates, as perhaps only half of homeowners who could profitably refinance have the equity and creditworthiness needed to qualify for traditional refinancing.

This is a really important set of points. They shouldn't sound new to Credit Slips readers, but it's really important to have a Fed Governor saying them.  

[btw, I commend Yves Smith's analysis of the Fed staff's report, as well as her commentary on the NY Fed speech. To summarize, it recites conventional thinking circa 2009--which is major progress for the Fed, sadly--and reads like a report cobbled together by economists who have no connection with the realities of the housing market. (Not that this is a new critique of either economists or the Fed. Say what you will about lawyers, but they tend to pay attention to institutional arrangements and practical issues. But this is a symptom of a larger problem of government policy-making in many areas moving from lawyers to economists.)  In particular, blathering on about bulk sales of REO to be turned into rentals shows a real disconnect with the market.  There's been only one firm that's been buying REO to turn into rental on any scale, Carrington (yes, that same Carrington that Rich Cordray, then Ohio AG, sued in 2008 and which has been screwing MBS investors to boot), and you'd better believe that they're cherrypicking, not doing bulk buys.  There's just no market demand for purchasing hundreds of dispersed single-family detached residences for rental because of the uncertainties or unworkabilities of the economics.]  

Governor Bloom Raskin also emphasizes that the foreclosures reviews are only step one.  There will also be monetary penalties.  Take note of the sentence I underlined below, that the penalties must be large enough to incentivize good behavior (and disincentivize bad behavior).  

The enforcement actions against these 14 institutions and the associated corrective action plans are only a start in a comprehensive enforcement response to the foreclosure crisis. Monetary penalties for the deficient practices in mortgage loan servicing and foreclosure processing also must be imposed against the 14 institutions. The Federal Reserve and other federal regulators must impose penalties for deficiencies that resulted in unsafe and unsound practices or violations of federal law, just as state banking commissioners and state attorneys general impose penalties for violations of state law. The Federal Reserve believes monetary sanctions in these cases are appropriate and plans to announce monetary penalties. One purpose of monetary penalties, when they are appropriately sized, is to incentivize mortgage servicers to incorporate strong programs to comply with laws when they build their business models. This is an operational purpose, but as mentioned earlier, monetary penalties also remind regulated institutions that non-compliance has real consequences; the law is not a scarecrow where the birds of prey can seek refuge and perch to plan their next attack.

If the Fed takes this seriously, then the penalties must (1) include disgorgement of all illegal servicing profits--something the CFPB calculated at around $24 billion, (2) include a penalty on top of that so that non-compliance with the law is not just revenue neutral, but revenue negative.  In other words, this is a clear is the benchmark by which the Fed and OCC must be judged.  If the penalty is a few hundred million, it's laughable.  And even a billion or two isn't in the ballpark. Consider the wrongdoing described by Governor Bloom Raskin:

a wide range of troubling issues, such as claims of missing or forged promissory notes; claims that mortgage servicers have foreclosed on the houses of active-duty U.S. soldiers who are legally eligible to have foreclosures halted; sworn affidavits containing false "facts" that homeowners were in arrears for amounts not yet due; claims of falsifications of documents required to transfer ownership of the mortgage; allegations of false affidavits claiming homeowners owe fees for services never rendered; and claims of false affidavits overstating how much homeowners are behind on their payments.

I was also glad to see Governor Bloom Raskin take note of the need for transparency in the federal review. 

It is also worth noting the obvious, which is that Congress enacted some of the laws that are allegedly being violated--they are public laws. Their efficacy must be evaluated and re-evaluated by the public. This means that enforcement of laws must occur in a manner that permits an appropriate public evaluation. There is currently a lively debate about the appropriateness and value of transparency regarding the regulatory remediation required by the enforcement actions entered into with the 14 mortgage servicers. The fact that this public debate is occurring is entirely appropriate, and underscores the importance that Americans place on enforcement in the mortgage servicing context.

The cease and desist orders against the 14 large mortgage servicers are publicly available; they have been fully disclosed. The corrective actions that the mortgage servicers are undertaking pursuant to the enforcement actions in an appropriate format also need to be shared with the public. Not only is the public directly and significantly affected by how the acts of mortgage servicers have contributed to the state of the economy, but cities, neighborhoods, and communities have a direct and significant interest in the role that mortgage servicers play in the value of a homeowner's investment.

To this I would add that it's not enough for us to know what corrective actions are being taken.  We also need to know exactly what the "independent" review finds for each servicer.  This cannot be done with the secrecy that typically accompanies bank regulation.  Sunlight is a necessary disinfectant here. 

The Fed has not yet released the engagement letters for the "independent" reviewers of its regulated entities. I am hopeful that they will be more transparent than the OCC's when released--it's inexcusable that the conflicts of interest sections and indemnification sections in the OCC letters were redacted so they can't be evaluated.

Indeed, as I've been thinking more about the independent reviews, I'm particularly troubled:  many of the entities doing the reviews are staffed by former bank regulators.  The servicing violations aren't something new. They've been going on for some time. But bank regulators never caught them. The bank regulators were asleep at the switch and only got in the game after the banks themselves voluntarily stopped some foreclosures and major scandal broke. So now we have some of the former cops who dropped the ball reviewing the banks on that very issue. Another turn of the revolving door. I'm shocked, shocked.  

While I get that "Requiring an independent review of certain banking operations is not a new enforcement tool," I don't understand why the bank regulators don't just do the work themselves and make the banks pay for it. That would make me feel far better about the conflicts.  

Let me end on an upbeat note.  I was particularly heartened to hear this line:  

Too many of the practices in the mortgage servicing industry have been developed and defended solely on the basis of "standard industry practice," but many practices were not only standard, but shoddy. This has proven true, I might add, on the underwriting and secondary-market sides of the business, and we are seeing courts reject many of those practices.

This is phrased rather obliquely, but I took it as a subtle endorsement of Ibanez, Levaya and other lower court rulings.  Perhaps I'm overreading, but I don't think so.  (Indeed, I think there was a lot in this speech that doesn't meet the eye in terms of references to inside-baseball things.)  Which brings me to a final point.  Something that is often not transparent to the outside world is that there are a range of opinions on regulatory issues, including mortgage servicing, within federal agencies. Servicing problems are not a new issue to Governor Bloom Raskin.  It is something she addressed aggressively as Maryland Commissioner for Financial Institutions, and she gets it. And while Governor Bloom Raskin was technically speaking for herself, that's not how Fed Governors operate; the Fed is really careful about messaging. When Governors give speeches, they are quite careful in what they say, as they are really speaking for the Fed.

The Fed has been far from perfect in terms of bank regulatory policy and consumer protection in the past. But what a difference we have here between the Fed and the OCC. I can't imagine the Comptroller making this speech. Let's hope that Governor Bloom Raskin's voice is one that is heeded more broadly in the federal agencies. 

1. Michael Olenick: The Administration Likes Foxes in Charge of Henhouses – Proof that OCC Foreclosure Reviews Are a Sham
2. Independent Foreclosure Review | OCC Says Independent Consultants Can’t Contact Borrowers
3. Federal Reserve’s Independent Foreclosure Review and HAMP Escalations Review

1. READERS | HELP DRAFT THIS: The Top 10 Biggest Bank Lies About Foreclosures
2. OUTRAGEOUS | Draft Uniform Servicing Standards – Proposed Deal from Bank to Attorney Generals
3. Sucker Alert | Senators Draft Bill to Give Visas to Foreigners Buying Pricey Homes, Fraudclosures

1. Principal reduction plan for struggling homeowners could be part of settlement between lenders and states
2. Elijah Cummings | Oversight Committee Democrats Urge FHFA Director to Produce Documents on Principal Reduction
3. The Seductive but Flawed Logic of Principal Reduction

1. Federal Reserve Orders $85M Civil Penalty Against Wells Fargo for Steering Potential Prime Borrowers Into More Costly Subprime Loans and Falsifying Income
2. Wells Fargo Damage Control Attempt – FL Attorney General Reaches Agreement with Wells Fargo Providing More Than $388 Million in Mortgage Relief to Florida Homeowners
3. Cease and Desist Order In the Matter of: WELLS FARGO & COMPANY and WELLS FARGO FINANCIAL, INC.

1. Bernanke Letter to Congress RE: Bloomberg 7.7 Trillion Secret Bailout Article
2. Ron Paul Reacts to Ben Bernanke as TIME Person of the Year
3. Bloomberg | Fed Must Release Loan Data as High Court Rejects Appeal

Flashover.

“The Federal Reserve and other major central banks moved on Wednesday to help foreign banks more easily borrow and lend money, seeking to forestall a breakdown of global financial markets and giving Europe more time to wrestle with its debts. The latest round of interventions by central banks, including the expansion of an existing Fed [...]

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1. Morgan Stanley to Pay $102 Million for Role in Massachusetts Subprime Mortgage Meltdown Under Settlement with AG Coakley’s Office
2. Breakin the Law | HUD Settles Respa Kickback Case In the Matter of Fidelity National Financial, Inc. Settlement Agreement
3. Federal Reserve Orders $85M Civil Penalty Against Wells Fargo for Steering Potential Prime Borrowers Into More Costly Subprime Loans and Falsifying Income

1. Is the Independent Foreclosure Review Really Independent?
2. Federal Reserve’s Independent Foreclosure Review and HAMP Escalations Review
3. PB Post | Bondi Seeks an Independent Review of Fraudclosure Investigators’ Dismissal

1. Federal Reserve’s Independent Foreclosure Review and HAMP Escalations Review
2. Independent Foreclosure Review | Flaws Jeopardize New Attempt to Help Homeowners
3. Is the Independent Foreclosure Review Really Independent?

1. Federal Reserve issues enforcement actions related to deficient practices in residential mortgage loan servicing and foreclosure processing
2. OCC Extends Deadline for Action Plans Under Foreclosure Practices Consent Order
3. PNC 10K Report | PNC Faces Inquiries that Could Lead to “Administrative, Civil or Criminal Proceedings” for Fraudclosure Practices

1. OUTRAGEOUS | Miriam Mendieta, Esq., Former Managing Partner of David J. Stern’s Fraud Factory to Lead Review of 4.5 Million Foreclosure Cases
2. Freddie Mac Sued by Attorney David Stern Over $1.3 million
3. Federal Reserve’s Independent Foreclosure Review and HAMP Escalations Review

1. 11.2 Million U.S. Properties with Negative Equity in Q1
2. Federal Reserve Board Report – The Depth of Negative Equity and Mortgage Default Decisions
3. Nearly 50 Percent of Palm Beach County Mortgages Underwater, and it gets worse from there

1. 11.2 Million U.S. Properties with Negative Equity in Q1
2. Federal Reserve Board Report – The Depth of Negative Equity and Mortgage Default Decisions
3. Nearly 50 Percent of Palm Beach County Mortgages Underwater, and it gets worse from there

1. $8.5 Billion | Bank of America Announces Agreement on Legacy Countrywide Mortgage Repurchase and Servicing Claims
2. Fraudclosure | Mortgage Review Urged at Bank of America
3. Federal Reserve issues enforcement actions related to deficient practices in residential mortgage loan servicing and foreclosure processing

1. A Letter from Goldman Sachs Concerning Occupy Wall Street
2. Matt Tiabbi | The People vs. Goldman Sachs
3. Federal Reserve Board announces a formal enforcement action against the Goldman Sachs Group, Inc. and Goldman Sachs Bank USA

OCC and the Federal Reserve announced this week that banks who service mortgages will be sending letters to homeowners this month and next, offering them an opportunity to request review of any 2009 or 2010 foreclosure.  Every homeowner who asks gets a full independent review by a foreclosure auditor.  A homeowner who was in any stage of foreclosure in 2009 or 2010 is eligible for review and possible compensation.  The request for review runs to five pages, and the web site is not exactly user-friendly.  There is also a toll-free number to apply:  888-952-9105.

Compensation will be paid (in the amount determined by the independent reviewers discussed on this blog previously) for financial injuries resuting from errors, misrepresentations or deficiencies in the foreclosure process.  Examples include foreclosures during bankruptcy or against an active-duty service member, improper legal or other fees, or foreclosure while a homeowner is in trial or permanent modification plan.  The deadline to request a review is April 30, 2012.  A request for review will not stop foreclosure, and redress payments will not require borrowers to release claims or affect any pending foreclosure litigation or bankruptcy proceeding.  The foreclosure reviews are being done by consulting firms, such as Price Waterhouse and Promontory.

However weak or unreliable this process may be, homeowners have nothing (other than some time) to lose by applying for a review.  Borrowers in foreclosure litigation or bankruptcy might also want to seek discovery of their audit/review files to see what deficiencies were identified (or missed).

1. Federal Reserve’s Independent Foreclosure Review and HAMP Escalations Review
2. Is the Independent Foreclosure Review Really Independent?
3. Foreclosure Fraud Review Begins Today by Homeowner Request

1. Federal Reserve’s Independent Foreclosure Review and HAMP Escalations Review
2. PB Post | Bondi Seeks an Independent Review of Fraudclosure Investigators’ Dismissal
3. Federal Agencies LPS Consent Order Allows for SERVICER Restitution

1. Foxes Guarding the Hen House | Analysis: Bank-Picked Experts Take On U.S. Fraudclosure Reviews
2. Foreclosure Fraud – BAC / Countrywide Must Pay $108 Million for Illegally Overcharging Struggling Homeowners; Loan Servicer Inflated Fees, Mishandled Loans of Borrowers
3. USA, DOT, OCC Fraudclosure Settlement Consent Orders for the Banksters