Accountability Office Slams Regulators Over Foreclosure Review
It cost roughly $2 billion for “independent reviewers” to scour millions of bank records riddled with foreclosure errors. Most of that was for naught, as the government ended up scrapping that plan altogether in favor of a bulk settlement of $9.3 billion.
Now, our Miami foreclosure lawyers understand the Government Accountability Office has slammed U.S. regulators over the fact that the entire review process was seemingly doomed by failure due to ineptitude – poor planning in particular.
The GAO determined that when the independent reviewers sat down to comb through some 4 million foreclosure records provided by more than a dozen mortgage servicers from 2009 and 2010, they had little guidance from the federal government on exactly what to do. There was no uniformity, and in fact there is ample evidence that the banks were meddling in the outcomes, skewing the end results in their own favor. The banks were not only paying these firms hundreds of millions of dollars each, they were providing default answer sheets that the reviewers would have to manually correct in order to decide in favor of the homeowner.
These were individuals who had lost their homes in foreclosure, despite the fact that much of the time, non-existent or fraudulent paperwork was used throughout the court proceedings.
The settlement might have seemed like a reasonable compromise, but for the fact that homeowners are getting a fraction of what they might have received had each case been carefully weighed on its individual merits based on actual damages.
Specifically, the agencies at which the GAO took aim were the Federal Reserve and the Office of the Comptroller of the Currency. The GAO said the review firms had notified the government that the files were enormous. Some contained as many as 50 documents, with as many as 2,000 pages per document. In some cases, it was taking more than a full-time workweek just to review a single file. This is not entirely surprising, considering the mess the banks left behind.
But the independent firms weren’t inclined to speed up the process, as they were being paid by the hour. Nor were they inclined to favor the homeowners, as it was the banks footing the bill.
The GAO said specifically that the OCC and the Federal Reserve could have given the review firms more complete guidance before the process started. That could have reduced the number of revisions that had to be made after the fact, and might have resulted in a successful review process.
The GAO’s review was requested back in January, and was completed early this month.
Representatives with both the OCC and the Federal Reserve declined to comment on the GAO’s report, but did say that any lessons culled from this experience will be applied to any future actions. We’re not sure how likely another foreclosure review process is, but we get the distinct sense the government, the banks and everyone else is eager to simply move on – regardless of whether homeowners are justly compensated.
In fact, the homeowners have largely been left without a voice throughout this entire ordeal. Our Miami foreclosure defense lawyers haven’t forgotten. We are staunchly committed to fighting for your rights.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.