Feds Failed to Disclose Breadth of Foreclosure Mistakes by Banks
The U.S. banking system has proven itself over and over and over again to be untrustworthy.
So why the federal government and its regulators would ever take these firms at their word – about anything, let alone regarding matters over which the bank has something to lose or gain – is beyond our Miami foreclosure lawyers.
Now, conflicting reports from the Office of the Comptroller of the Currency – the regulator that oversaw the botched independent foreclosure reviews and subsequent $9.3 billion settlement deal – reveal that these reviews were more flawed than originally believed.
Initially, when the OCC announced the settlement back in January, it indicated that about 6.5 percent of the independent reviewer files contained errors that resulted in the banks needing to compensate borrowers. But then that rate was revised to little more than 4 percent.
Additionally, The Wall Street Journal recently came out with its own extensive analysis indicating that the error rate was actually somewhere in the neighborhood of 11 percent for Wells Fargo and 9 percent for Bank of America. A separate analysis revealed error rates of 21 percent 16 percent, respectively.
Skewing the error rates downward ultimately cost homeowners.
Of course, the questionable nature of those “independent” reviews were what led the OCC to press for a settlement in the first place. But then they don’t even get it right in the settlement?
Congressional leaders are pressing the agency for more about what led to the faulty error rates, why they were so off the mark and how they answer to media reports that the rate was actually much, much higher. Bear in mind, these were the rates that were used to reach that settlement figure. Inaccuracies mean that the banks aren’t forking over as much as they should to right their wrongs – something that has seemingly become the norm in matters like these.
And of course, even amid lawmaker scrutiny, there is little evidence that a whole lot can be done at this point to force the Federal Reserve and OCC to alter that agreement, which it reached with 13 banks. Still, the Treasury Department’s inspector general, which oversees the OCC, is investigating the handling of the reviews and why they weren’t accurate in the first place.
Borrowers are supposed to be notified at some point this month whether they will be getting some form of compensation as a result of the settlement – some $3.6 billion paid out to more than 4 million homeowners whose houses were seized in foreclosure in 2009 and 2010. The agreement also allows for another $5.7 billion – non-cash – that the banks will get credit for each time they offer loan modifications to existing homeowners.
There is concern of course that the way the settlement is written, banks could receive credit for the entire principal balance of those loans, as opposed to just the amount being forgiven. No doubt, the latter was the intention, but this loophole could serve to deprive thousands of homeowners of any relief at all.
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.