Banks and Servicers agree to Consent Order – Wrongful Foreclosure will be compensated. But who gets money and how much?

In what appears to be another act of federal window dressing to put Americans and foreign investors at ease that our financial system is the best in the world and worthy of your investment dollars, the Federal Regulators (OTS, OCC, and FRB) have concluded their investigation into foreclosure practices of the major banks and loan servicers and have come up with a settlement order that is supposed to make us all feel good.

The details on the consent order of the Office of Thrift Supervision (OTS) can be found here.

The basics of the settlement orders (which include banks such as Bank of America, JP Morgan Chase, Wells Fargo, Citigroup, US Bank, One West, Aurora, ALL Y Financial (formerly GMAC), and yes, our good friend MERS (the software company) are as follows:

(1) The banks and servicers neither admit nor deny any liability (hmmm, that’s a good start – I wish DRE audits could end up that way)

(2) The banks are supposed to set up an independent consulting firm to review their individual practices and come up with a compliance game plan in 60 days (hmm, since they have sworn up and donw in court and elsewhere that they have done nothing wrong, not sure what their game plan will consist of)

(3) The game plan is supposed to address certain “unsafe and unsound acts” and “deficiencies” (I guess we can’t call it fraud – that is a bad word) such as:

• False assignments of Deeds of Trust and transfer of other mortgage documents
• False affidavits to Bankruptcy and Foreclosure Courts
• Fix the robosigner problem
• Better oversight of outsourced serviced providers and third party law firms who have assisted in foreclosure-gate
• Improper notarization of records that have been submitted to courts and the county recorder’s offices across the country
• Etc. etc.

Sounds great, but these banks and financial institutions have always claimed to be 100% clean, and have blamed borrowers and their attorneys for everything.  We will have to wait and see what their independent investigations reveal and what their self-imposed compliance plan will detail.

Question:  What about dealing with RESPA and TILA rights.  Banks / Servicers could give a c*** about that either, at least generally speaking.

Also, there is supposed to be a compensation, remediation, and reimbursement for “wrongful foreclosures” committed between 2009-2010 (but no third party beneficiaries of the settlement agreement are allowed).  There are no guidelines as to who qualifies, what the standards or criteria is, or what amounts will be paid.

There is also no mention of any private right of action – and third party beneficiary status under these agreements is negated.  Just a bunch of self-enforcement back slapping and compliance window-dressing???

The 50-state state attorney generals, treasury, FTC, Justice department and CONSUMER FINANCIAL PROTECTION BUREAU (created by the Dood-Frank Act) are also continuing there investigations, and we will see what that brings.

Taking this with the 50-States Mortgage Mess Settlement agreement with the state Attorney general’s (See mortgage mess settlement agreement) – which was another measure seeking to bring some fairness into this mess of a foreclosure system – shows the extent of the foreclosure problem in America.  The banks, who gave risky loans to virtually anyone with a heartbeat (no document loans, false appraisals, negam loans, option arm loans, stated income loans, etc.) need to step up to the plate and honestly fix this system and compensate people who have been wrongfully foreclosed.

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