Remember when banks were discovered to be acting unethically and illegally in their foreclosure processes? And remember how regulators were supposed to step up to the plate and handle business that the banks could not or would not do? Now, Washington is looking for help in distributing billions of dollars to homeowners in foreclosure and who they’re turning to has more than a few folks upset. They’re looking to the banks – the same ones that brought the sector to its knees – to distribute those funds. These are the same banks that were found to be abusing homeowners and allowing shoddy foreclosure practices to rein supreme. But the government says its regulators will “check the work” of the banks.
So why would the U.S. Government turn to the ones responsible for creating the mess in the first place? It says the regulators are looking to “speed the process after a flawed, independent foreclosure review delayed relief for millions of borrowers”. Not surprising, there are many consumer groups who are crying foul. They are concerned that banks will attempt to rush through the process, which, by the way, is costing them money every day they have it in their laps, and will overlook crucial information which could put homeowners in an even worse predicament.
Further, the government insists it has several protective mechanisms in place, including agreements from the banks to pay a certain amount to homeowners. As it turns out, there are a few anonymous reports that say the regulators who work for the government were left with no other options, especially after the Office of the Comptroller of the Currency short stopped an ongoing foreclosure review that was being conducted by independent consultants. The agency said that there were too many delays and ineffective efforts.
To speed up the process, there was a multi billion dollar settlement made between the banks and the government. This included more than $3.6 billion that would be paid to homeowners. Further, the OCC made the questionable decision to keep it straightforward for the same of time. The consultants were out and the banks were back in. A conference call between all of the involved banks and the comptroller’s office resulted in an “outline” of a plan that was put into place and the banks were told to run with it. The banks will now be required to complete assessments with the goal of finding or ruling out errors and that information will determine who receives what in terms of payouts.
The problem, despite these latest efforts, is simply not being remedied. Instead, it’s moving from one conference call to another and one government agency to another. This has also delayed the payments to homeowners. Again. They are now being told it could be late March before their cases are addressed. Bank of America must distribute $1.1 billion to homeowners. Wells Fargo owes more than $700 million.
Lawmakers are not happy and some homeowners have waited for more than a year, each month being promised some kind of progress, only to realize it’s not happened. Those homeowners are making their displeasure known to their elected officials, too.
The whole process has been a slap in the face to homeowners and a slap on the wrist to banks,
said Isaac Simon Hodes, who is a community organizer with Lynn United for Change.
The latest development shows how there has been no accountability.
Many are still facing foreclosure and are unsure what to do or where to turn. Many more are on the brink of bankruptcy and will likely include credit card debt, medical bills and of course their mortgages. None of this bodes well for a still struggling national economy. Last year, there was a group of consumer advocates, regulators and even some bank leaders who come together with the goal of at least getting some of the funds released as payments to homeowners. That never happened and instead, the suspicions continued to grow. Words like “empty promises” and “fraud” are now common in those circles.
This week, Thomas J. Curry, comptroller of the currency and a top regulator decided to “shed light” on his decision to end the independent reviews in lieu of bringing the banks into the game. Some said he and other were concerned about public image. During a luncheon this week, Curry explained he took over the comptroller’s office months after the problems began surfacing. He said that the independent consultants were not making progress, but had already been paid $2 billion in charges and fees.
It just doesn’t make sense for these servicers to continue funneling money to consultants that could be better used to help distressed borrowers who have lost their homes,
according to a copy of his written remarks before the Women in Housing and Finance group.
He went on to explain that this past November, he was reviewing the paperwork of the consultants’. He said that there was $2 billion gone to those same consultants, but
We were still not ready to compensate the first borrower,
he said. It was at that point the decision was made to no longer delay compensation because of the ineffective consultants. Instead, he decided to enter into talks with the banks and ordered them to make at least $3.6 billion in cash payments to those homeowners. And once again – homeowners are back at square one. These latest changes, as mentioned, now mean it’s going to be late March before anything is paid out – and perhaps not then either.
Curry says he’s not concerned about any potential conflicts of interest, even as he said
It’s critical that we restore trust in this industry so that families undergoing foreclosure can have faith that they will at least be treated fairly.
But, when banks and politics are involved, there’s no shortage of blame to go around. Some consultants continue to insist they sounded “repeated alarms” about the process they were expected to follow. Then, last summer, a group of consulting firm executives met with comptroller officials in Washington. They too had their own concerns to voice and to explain that they weren’t responsible for the problems. They said the review process was “too narrow” and was because of the guidelines created by the comptroller’s office.
Are you waiting to hear from the bank about a payout? Have you received any kind of notification of all the changes and delays? We’d like to hear your story. Share it with us in the comments or visit us on Facebook and join the conversation.