I’m not one for fairy tales, for shining white knights, and magical rescues.
I’m not cynical, but I am a realist. When it comes to fixing the housing market, and righting the wrongs of the fraud-closure crisis, there is no magic wand.
If you’re waiting for the government ‘cavalry’ to ride in and make everything alright, I’m sad to say you’ll be waiting a long time.
Time and time again homeowners have looked to government programs for justice, but with a decidedly mixed bag of results.
Maybe that is why I was not all that surprised at some of the glaring omissions that I found with the Independent Foreclosure Review program.
It has not received the same amount of press as the servicing settlement that the attorneys general agreed to, but this Independent Foreclosure Review is also supposed to rectify the ‘errors’ committed by servicers, if you were in foreclosure between 2009 and 2010.
Any homeowner is eligible to apply for the review process, which bank regulators have promised will be free from the banks’ grips, despite the fact that the banks are PAYING the consultants who are performing the reviews.
That’s Strike One.
And of course the regulators, not the banks, are still referring to fraud as an ‘error.” Yet another undersell of the banks’ illegal activities. Strike Two.
Oh and there is no appeal process if the consultants rule against you. Strike Three.
Last week the Officer of the Comptroller of the Currency and the Federal Reserve, the two agencies behind this program, announced an extension for homeowners who want to file for one of these so-called independent reviews, and for the first time laid out the specifics of the ‘errors’ done by the banks and penalties and what type of ‘errors’ these penalties would cover.
And here is perhaps the program’s fatal flaw. (Can we call this Strike Four?)
While the remediation process does offer some meaningful forms of restitution in some cases, it is glaringly absent in the vast majority of scenarios the program lays out.
So to any homeowner counting on this review for any type of acknowledgment of the illegal acts committed against them, or for a substantial check because they were wrongfully foreclosed on, I say don’t hold your breath.
There are just too many loopholes, too many ways the banks can slip and slide out of taking responsibility yet again.
The OCC and the Federal Reserve, just as the banks and countless other institutions have done before, have glanced over or just plain omitted the most egregious errors committed by the banks.
In the 14 possible violations detailed in the framework for the Independent Foreclosure Review process, you won’t find the word fraud. Not a single example of forgery. Perjury? Nope.
Now both organizations freely admit that they don’t cover all possible scenarios, but still they have left out the ones that are not only the most serious, but affected a great deal of homeowners.
Perhaps the closest they come to addressing robosigning is Category 11 — “No Standing”. The error, as described in the framework, “Servicer did not have standing to foreclose”.
Of course the description doesn’t say WHY they didn’t have the legal standing, but my readers know these banks either didn’t have the proper documentation, or just made up phony documents as they went along.
But if a servicer is found to have lacked the legal standing, the consultants performing these reviews, again the ones BEING PAID by the banks, have been given too much leeway, and the banks have been given too much wiggle room.
In almost every other scenario the remedies are clearly spelled out. For example if servicer violated the Servicemembers Civil Relief Act, either the homeowner has their foreclosure rescinded and receives $15K, or they are paid $125,000 plus equity if the foreclosure can not be reversed.
But if a bank is found not to have had standing to foreclose, remediation is “determined on a case-by-case basis”.
Translation: There are no guarantees, no princes on white horses coming into save the day.
Now I’m not suggesting you shouldn’t apply for a review. But what I am saying is you can’t count on it to rescue you. All of these government solutions, whether it’s the servicing settlement or this review process, won’t solve all of your problems.
It may sound self-serving, but the way to have the best chance of holding the banks accountable is to do so yourself. Find competent legal counsel, dig up every piece of paperwork you can, and take the banks to court.
I may not be a white knight, but I am an attorney who will fight for his clients.
In The Trenches,