Review of Past Foreclosures – Merely an Illusion and Eyewash?
Photo by Wiertz Sébastien
As per a settlement with fourteen financial entities and the Federal Reserve as well as OCC, those wrongly foreclosed upon will get a chance to have their cases reviewed. The banks have started sending letters to millions of borrowers who faced foreclosures during 2009 and 2010.
But many questions are being raised. The review of past foreclosures – is it merely an illusion and eyewash? Those engaged by the banks to do the reviewing do not have the necessary experience.
Ed Delgado formerly an executive with Wells Fargo said, “You’re dealing with a system that is so taxed that if you’re taking more resources to check and recheck there has to be a point of diminishing returns”. At present Delgado is with Five Star Institute and imparts mortgage training.
Housing advocates are criticizing the reviewing process that has been initiated. Their contention is that sub-standard personnel have been engage to make legal assessments that are highly complex. There is no transparency. On what basis would these reviews calculate the damages done?
The reviewer’s decision is final and no appeal can be made. The regulators stand is that they have worked hard to organize “impartial reviews” but they did not say anything about the sort of guidance that has been given to the banks regarding compensation to the wronged house owners.
The documentation matter also is not clear. How much of it would be required to find out if the previous house owners had been harmed? As a part of the review the borrowers would not be called for interview but they would be expected to submit documents.
Some of the consumer advocates argue that the process would get bogged down if either the lenders or the previous house owners did not keep records. Advocate Debby Goldberg of National Fair Housing Alliance said, “How many borrowers who went through foreclosures saved all of their paperwork to document whether that was a fair outcome”?
Rep. Maxine Waters (Democrat/California) referred to the entire operation as “an exercise designed to create an illusion that past wrongs are being corrected”.
Meanwhile separate negotiations are going on between the banks and the attorneys general as well as federal agencies regarding foreclosure wrongs. There is a proposal that the banking sector will come forward with $25 billion, and write down loan principal to settle charges against five mega servicers.
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