servicers | FORECLOSURE FRAUD | by DinSFLA - Part 2

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OCC Releases Status Report on Fixing Deficient Foreclosure Practices, Names Of Consultants Conducting Reviews

OCC Releases Status Report on Fixing Deficient Foreclosure Practices, Names Of Consultants Conducting Reviews

November 22, 2011
Contact: Bryan Hubbard
(202) 874-5770

OCC Releases Status Report on Fixing Deficient Foreclosure Practices

WASHINGTON — The Office of the Comptroller of the Currency (OCC) issued a report today on the actions by 12 national bank and federal savings association mortgage servicers to comply with consent orders issued in April 2011 to correct deficient and unsafe or unsound foreclosure practices.

The report, “Interim Status Report: Foreclosure-Related Consent Orders,” summarizes progress on activities related to the independent foreclosure review announced November 1, 2011, as well as other activities to enhance mortgage servicing operations, strengthen oversight of third-party service providers and activities related to Mortgage Electronic Registration Systems (MERS), improve management information systems, assess and manage risk, and ensure compliance with applicable laws and regulations.

While much of the work to correct identified weaknesses in policies, operating procedures, control functions, and audit processes will be substantially complete in the first part of 2012, other longer term initiatives will continue through the balance of 2012.

In addition to the interim report, the OCC also released engagement letters that describe how the independent consultants, retained by the servicers, will conduct their file reviews and claims processes to identify borrowers who suffered financial injury as a result of deficiencies identified in the OCC’s consent orders.  The letters identify the names of the independent consultants conducting the reviews and include language stipulating that consultants would take direction from the OCC throughout the reviews.  This language specifically prohibits servicers from overseeing, directing, or supervising any of the reviews.  Limited proprietary and personal information has been redacted.  The review process being implemented at some companies may differ from that described in the engagement letters because of subsequent coordination with the OCC to ensure a consistent process among the servicers. 

Related Links

# # #

Pursuant to 12 C.F.R. § 4.12(c), the disclosure of the engagement letters at the OCC’s election has no precedential significance.

source: occ

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Foreclosure Review Services (FRS) was neither proposed nor reviewed by either OCC or Federal Reserve

Foreclosure Review Services (FRS) was neither proposed nor reviewed by either OCC or Federal Reserve

UPDATE: Mr. Bryan Hubbard Director of Public Affairs Operations at the Office of the Comptroller of the Currency (OCC) has informed this site of the following after several blogs learned that a former David J. Stern’s Attorney, Miriam Mendieta was to assist in reviewing of 4.5 Million foreclosure fraud cases:

Foreclosure Review Services (FRS) has not been contracted by any of the independent consultants conducting independent foreclosure reviews required by the consent orders issued by the OCC in April. The OCC and Federal Reserve reviewed independent consultant and subcontractors for conflicts of interest prior to approval. FRS was neither proposed nor reviewed.

Bryan Hubbard
Director, Public Affairs Operations
Office of the Comptroller of the Currency

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Former David J. Stern’s “Controlling Attorney”, Miriam Mendieta to Assist in Review of 4.5 Million Foreclosure Fraud Cases

Former David J. Stern’s “Controlling Attorney”, Miriam Mendieta to Assist in Review of 4.5 Million Foreclosure Fraud Cases

UPDATE:  Foreclosure Review Services (FRS) was neither proposed nor reviewed by either OCC or Federal Reserve

Rumor was Miriam may be working for Florida Default Law Group aka NetDirtector,

And remember what Prof. Levitin was saying, watch out for Robo-Signing 2.0!

Lets not forget about a famous deposition from a former Stern paralegal where she mentions Miriam knew about the documents and was a controlling attorney for the firm!

I wonder who owns FRS?

Foreclosure industry veterans offer foreclosure review services in response to the Office of the Comptroller of the Currency’s “Independent Foreclosure Review” program.

Miami, FL (PRWEB) November 21, 2011

Foreclosure Review Services (FRS) provides contract attorneys who diligently review cases to determine whether a homeowner may have suffered financial injury as a result of errors, misrepresentations, or other deficiencies in the foreclosure process.

FRS’s Director of Operations and Training, Miriam Mendieta, Esq.,is a nationally recognized industry expert with over 15 years of hands-on experience. Miriam served as the managing attorney for one of the largest creditor’s rights firms in the country where she was responsible for the oversight of all the aspects of foreclosure and bankruptcy related services.

FRS’s team of contract attorneys are extensively trained to properly review and analyze each case. FRS will review each foreclosure case to determine if the homeowner suffered financial injury as a result of errors made during the foreclosure process.

The reviews are part of a series of compliance actions initiated by the Office of the Comptroller of the Currency.

FRS has facilities in Dallas and South Florida and also provides consultants onsite.

FRS: Foreclosure Review Services
1395 Brickell Ave., Ste. 800
Miami, FL 33131


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Baum Firm Could Possibly Owe “Millions of Dollars” From Foreclosured Properties

Baum Firm Could Possibly Owe “Millions of Dollars” From Foreclosured Properties


What’s in this law firm’s wallet?

New York state’s beleaguered, largest foreclosure law firm — which today announced plans to shut down in the face of a firestorm of legal action — has allegedly failed to turn over about $130,000 owed to three people whose co-ops were foreclosed on, and could be sitting on millions of dollars of hundreds of other people’s money without those people knowing, The Post has learned.

Steven J. Baum P.C.’s move to shutter came a week after it was made ineligible to get new referrals on any Fannie Mae or Freddie Mac mortgages — essentially a death knell for the controversial firm. The two federally backed mortgage giants moved in the face of numerous complaints about questionable legal filings by Baum.

 On Friday, a Brooklyn lawyer sued Baum claiming that the firm repeatedly ignored his attempts to obtain about $130,000 for three people whose co-ops were foreclosed on and later sold off in Baum-supervised auctions.
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Steven J. Baum P.C. law firm to close

Steven J. Baum P.C. law firm to close

Get em before they shred… remember 18 wheelers moving boxes at David J. Sterns when they were closing down?

“We will fulfill all of our obligations under WARN and during this process we will also fulfill our remaining work on behalf of our clients,” Baum said in a prepared release. “Disrupting the livelihoods of so many dedicated and hardworking people is extremely painful, but the loss of so much business left us no choice but to file these notices.”

Buffalo Business First-

The embattled Steven J. Baum P.C. law firm is the closing its doors after a series of missteps that included mortgage industry giants Freddie Mac    and Fannie Mae    cutting off business with the Amherst-based firm.



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Occupy Buffalo protesters picket at Baum law office

Occupy Buffalo protesters picket at Baum law office

“Hey, hey. Ho, ho. Steven Baum got to go,” they chanted.


Buffalo News-

Nearly three dozen protesters from Occupy Buffalo demonstrated in front of the Amherst offices of Steven J. Baum PC, denouncing the controversial foreclosure attorney and calling on state authorities to shut down his office, take away his law license and even put him in jail.

The ragtag band of protesters, many of whom have been camping out in Niagara Square in downtown Buffalo, held up handwritten cardboard signs and chanted slogans to the beat of a bongo drum. They assembled at the corner of Northpointe Parkway and Sweet Home Road, before beginning a slow march down to Baum’s office at 220 Northpointe.

“Hey, hey. Ho, ho. Steven Baum got to go,” they chanted.

Signs called for a “moratorium on all foreclosures now,” proclaimed that “housing is a right,” and called Baum “the Grinch who stole houses.” Some protesters also wore paper crowns because “Stephen J. Baum is the foreclosure king of New York State,” said Samantha Colon, the spokeswoman for the protesters.


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Fannie and Freddie terminate Steven J. Baum law firm from attorney networks

Fannie and Freddie terminate Steven J. Baum law firm from attorney networks

This is a major victory. We will not rest until every last one is done… Including MERS!!

Housing Wire-

[Update 1: Adds confirmation that Fannie has terminated Baum firm from its attorney network]

Fannie Mae said Tuesday that it has removed the Steven J. Baum firm from its designated attorney network.

Last week, Freddie Mac told mortgage servicers they may no longer refer New York foreclosure or bankruptcy cases to the Steven J. Baum PC law firm.

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Ka-Boom! Freddie Mac Quits Steven J. Baum, P.C. As A Designated Counsel On and after November 10, 2011

Ka-Boom! Freddie Mac Quits Steven J. Baum, P.C. As A Designated Counsel On and after November 10, 2011

via Freddie Mac

On and after November 10, 2011, Servicers may not refer any new Freddie Mac foreclosure or bankruptcy cases in New York to Steven J. Baum, P.C., whether referred within or outside of the Program.

Attorney Susan Chana Lask says

“This looks like the beginning of a well-deserved end for Baum”



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But Mousie, thou art no thy lane,
In proving foresight may be vain:
The best-laid schemes o’ mice an’ men
……………Gang aft agley,
An’ lea’e us nought but grief an’ pain,
……………For promis’d joy!

To a Mouse, Robert Burns

MERS, the Mortgage Electronic Registration Systems, was the creation of a mortgage industry
beset by a tremendous spike in the rate at which mortgage assets were being passed around on the
secondary market in an effort to reap the benefits of securitization. More transfers meant more
paperwork, more trips to an increasingly backlogged county land office, more assignments and
other mortgage-related documents to record, and of course more filing fees. Finally the industry
came up with a plan, ingenious on its face, and yet shrouded in just enough mystery to conceal a
number of assertions that are, upon closer scrutiny, decidedly untenable within the framework of
existing law. Further gaps in the system have allowed unscrupulous individuals to play fast and
loose with the foreclosure process, and although MERS has taken steps to prevent such mischief
in the future the damage already done is of potentially staggering proportion.

The mortgage industry had a number of objectives, a salient of which was the creation of
a privately run, electronic database that would be far more efficient and cost-effective in tracking
the beneficial interests in mortgage loans, servicing rights, and warehouse loans than the traditional
system of county recording offices. With today’s information technology this proved to be
a challenging but nonetheless straightforward undertaking. But there was another objective as
well, one that was far more ambitions—and problematic: to design a system that would allow
successive owners of a mortgage loan to avoid the time-consuming and costly process of having
to run to the local land office to file the necessary paperwork every time a transfer of the mortgage
took place. It is in the methodology by which this latter objective would be accomplished
that the intrigue begins.

The idea was for MERS to be set up as a member organization the members of which
would all individually agree to name MERS as the mortgagee of record in the local land office.
MERS would then track the mortgage loan electronically through its database and, because of the
agreement with its members, would remain the mortgagee of record at the local land office. Thus
the only time an assignment would be recorded would be if the mortgage loan were transferred
out of the MERS system or the actual owner of the mortgage were planning to foreclose in its
own name. This would not only save time and money but add liquidity to the secondary market
as well, thereby making mortgage assets more attractive to investors. Simply put, the goal was to
enable MERS’s designation as mortgagee in the public records to survive and persist in spite of
multiple transfers of the underlying economic obligation on the secondary market.

It was a brilliant idea—or so it seemed.

[ipaper docId=72486193 access_key=key-6gw5dyo43w041j0zt3h height=600 width=600 /]


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Adam Levitin | The Multistate Foreclosure Settlement

Adam Levitin | The Multistate Foreclosure Settlement

Credit Slips-

The New York Times came out with a strong editorial urging state AGs and the Administration not to rush into the proposed multi-state settlement deal. I think it’s worthwhile reviewing what we know about the deal and the arguments for and against it.  Let’s start with the facts that we know.  There aren’t many that are publicly confirmed; the Administration, the AGs leading the multi-state settlement, and the banks very much want to avoid public comment on the deal–they want to present it as a fait accompli.  As a result, there hasn’t been definitive reporting on the contents of the term sheet currently circulating among AGs.  It appears, however, the the deal has the following features.


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Flaws Jeopardize New Attempt to Help Homeowners – ProPublica

Flaws Jeopardize New Attempt to Help Homeowners – ProPublica

by Paul Kiel
ProPublica, Nov. 4, 2011, 10:41 a.m.

Banking regulators this week launched the government’s latest attempt to help troubled homeowners — the Independent Foreclosure Review — heralding it as a thorough and fair way to compensate homeowners victimized by big banks. But early indications are that this program, like earlier efforts, has fundamental flaws.

The most central question — how compensation will be calculated — has not been determined, regulators said, and it’s even unclear what type of compensation borrowers would get: cash or a non-monetary remedy. Many key elements of the program have been kept secret, including the specific bank errors or abuses that would merit compensation. Democratic lawmakers have questioned whether the personnel deciding who deserves compensation are qualified to do so. And the process, which allows no appeals, can require homeowners to put forth their cases in writing, a formidable task that consumer advocates say many borrowers lack the expertise to do.

The government’s previous main effort to aid troubled homeowners, the Obama administration’s widely criticized [1] Home Affordable Modification Program, attempts to keep troubled borrowers in their homes by facilitating loan modifications. The new review has a different goal, and it was developed by federal bank regulators, who are independent from the administration. The review is one response by regulators to the widespread revelations [2] last fall that mortgage servicers — companies that collect home-loan payments — were regularly filing false affidavits signed by so-called robo-signers [3]. The new program will evaluate up to 4.5 million home loans to determine whether those borrowers were victimized by bank errors or abuses and, if so, what compensation the banks must pay.

The task of evaluating so many loans — those in foreclosure at any point during 2009 or 2010 — is beyond regulators’ capacity. So the two agencies heading the effort, the Office of the Comptroller of the Currency (OCC) and the Federal Reserve, have overseen the selection of eight “independent consultants” that will do the work. The government has refused to identify these consulting firms, though it now says it will.

Many details unclear

Regulators said Tuesday they have not yet determined how the consultants and regulators will calculate the financial harm a homeowner suffered, and therefore what compensation the banks would have to pay. Even the form of compensation — cash or something else — remains unclear. An example of non-cash compensation, said OCC spokesman Bryan Hubbard, could be repairing a borrower’s credit report.

Regulators have declined to provide a comprehensive list of the problems the consultants will be looking for — in essence, what constitutes an abuse or error by a mortgage servicer. Regulators have issued guidance on this topic to the independent consultants, but during a conference call Tuesday with reporters, they declined to make those documents available.

Regulators have given some public indications of what they’ll be looking for, which we note on our FAQ about the foreclosure reviews [4]. In April, regulators issued “consent orders” [5] that laid out some of the faults committed by the biggest servicers, which collectively handle almost 70 percent of the country’s mortgages. The orders also mandated this new foreclosure review to address past problems and general standards that servicers should follow going forward.

So far, regulators have withheld the identity of the eight consulting firms that will conduct the reviews — a stance that angered some members of Congress. In July, a group of about two-dozen senators [6] and representatives [7] — all Democrats except for Sen. Bernie Sanders, I-Vt. — objected to the lack of transparency and questioned whether the consultants had conflicts of interest [8] such as ongoing business relationships with the banks.

The consultants will be paid by the banks, but regulators must approve each consulting firm and its scope of work. Last week, some House Democrats pushed to subpoena [9] the documents, called engagement letters, that identify the consulting firms and spell out what they would do. On Tuesday, the OCC said it will release those documents later this month.

OCC officials say they’ve worked diligently to ensure that the consultants are truly independent of the banks. The banks sought to hire some consulting firms and law firms that had “inappropriate conflicts,” said Joe Evers, the OCC’s deputy comptroller for large banks, so regulators disqualified those companies. Evers declined to identify the firms or how many had been disqualified.

Lawmakers have also expressed concern about the experience of the personnel who will conduct the reviews. At least three temporary staffing agencies have posted positions for a “Foreclosure [10] File [11] Reviewer [12].” (One agency said it doesn’t discuss its clients, and the other two didn’t return phone calls requesting comment.) The ads reviewed by ProPublica typically call for some foreclosure or mortgage-servicing experience but little else. Critics have questioned [13] whether the people filling these positions will be qualified to determine whether servicers followed the law.

“Distressingly, the job solicitations for these positions seem to suggest that servicers intend to hire individuals with no more expertise than the so-called ‘robo-signers’ that created many of these problems in the first place,” wrote Rep. Maxine Waters, D-Calif., in a letter to regulators last week [14].

See the foreclosure review job ads:

The OCC’s Hubbard responded that the consultants “have spent significant time training staff, who will be supported by subject matter experts and whose work will be governed by a rigorous quality assurance process.”

It’s not known how long the reviews will take: On Tuesday, the OCC’s Evers said only that he didn’t think it would last “years.” He said he couldn’t guarantee, however, that the process wouldn’t stretch into 2013. Even before Tuesday’s launch, many consumer advocates and homeowners had viewed the process skeptically [5] because regulators had overlooked servicing abuses for years [15] and because regulators developed much of the new review process behind closed doors. Housing counseling and consumer groups could have given valuable input on the types of problems homeowners have faced in the past few years, said Alys Cohen of the National Consumer Law Center, but they were shut out of the process.

The OCC’s Hubbard said regulators did meet last week with consumer groups to discuss the process, and that Hope Now, a servicer-dominated alliance [16] with counseling organizations and community groups, had been involved earlier. Cohen said consumer groups hadn’t received any “meaningful information” during last week’s meeting.

Burden on borrowers

Not all eligible loans are guaranteed a review. First, the consultants will screen each servicer’s portfolio using a statistical sampling method to select loans with “the highest potential for financial injury,” as OCC head John Walsh put it in a speech [17] in September. Regulators have not released details on that sampling method. The loans flagged by this statistical method will be automatically reviewed.

But if homeowners want to ensure that their loan is reviewed, they must submit a “Request for Review Form [18].” (Homeowners can see our FAQ on how to submit their complaints [4].)

The OCC and the Financial Services Roundtable, a trade group representing the biggest banks, refused to provide ProPublica with a sample of this form, even though a version of it will likely be mailed to millions of people. They cited concerns about “copycats, fraud and the negative effects on truly eligible borrowers who would suffer if the system becomes unnecessarily burdened with requests which are out of scope,” as the FSR’s Paul Leonard put it. Nevertheless, we obtained a sample of the five-page form, which you can see here [19]. (Homeowners need to obtain a form specific to their case in order to submit a request. See our FAQ for more information [4].)

The form includes a list of yes-or-no questions such as “Do you believe that you were denied a modification when you qualified under the applicable program rules?” and an open-ended request to “Describe any other way in which you believe you may have been financially injured as a result of the mortgage foreclosure process.”

But homeowners often lack the legal or technical expertise to know why their foreclosure was wrong or abusive, Cohen said. “They just know how they were treated.” She drew an analogy to going to court without a lawyer: “This essentially looks like a class-action case where the homeowners have no representation,” she said.

The review process

After a borrower mails the Request for Review Form, the consultant will obtain the borrower’s file from the servicer. The consultants will not interview borrowers but may ask them for additional documentation.

After the consultants have reviewed the loan files, they will write up their findings in a report, which will be turned over to regulators and the servicer of the loan but not to the borrower. Based on that report, the servicer will put together a report of its own on how it will compensate the borrower. Once regulators approve that plan, the servicer will send the borrower the findings of the review, including details on what compensation, if any, the borrower will receive.

OCC officials would not say whether homeowners will be asked to waive their right to sue their servicer in exchange for accepting the compensation. Borrowers will not have an opportunity to appeal the findings or the offer. But, Hubbard said, if homeowners decline their compensation, they retain “the right to pursue satisfaction through the courts or other means that may exist.”

The consultants will attempt to mail every eligible borrower a copy of the Request for Review Form [18] — no small task given that, by definition, many foreclosed homeowners no longer live at the addresses the loan servicers have on file. For such people, the consultants will attempt to find new addresses. Regulators will also oversee an advertising campaign in newspapers, magazines and online, but the campaign may change depending on the response rate, Hubbard said.

The process has already proved confusing for at least one homeowner. Dan Sanders of Marysville, Calif., contacted ProPublica in early October after receiving a letter from the OCC’s Customer Assistance Group that said his case would not be covered by the foreclosure review. The reason, the letter said, was that Sanders had not actually lost his home to foreclosure, and the review was limited to completed foreclosures. That’s not true.

Hubbard said the error was unfortunate but said a review by the OCC’s ombudsman concluded that Sanders was the only homeowner who’d received this misinformation, which was the result of one OCC employee’s error. Sanders can submit a request for review, which would ensure his case gets evaluated.

ProPublica will continue to monitor the foreclosure review process as it progresses. Homeowners going through the process should read our FAQ [4], fill out our questionnaire [20] if they haven’t already, and let us know what’s happening [21].


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ROBO-SIGNED? Don’t expect to find it in the not so Independent Foreclosure Review FAQ’s

ROBO-SIGNED? Don’t expect to find it in the not so Independent Foreclosure Review FAQ’s

Looking over the so called Foreclosure Review FAQ’s, I found it extremely surprising that the word “ROBO” was not in there, heck not even close to any interpretation that your review may consist of any robo-signed documents.

The most disturbing part is that the servicers are going to start sending out letters today, the question is to whom? THE PEOPLE WERE ALREADY EVICTED, IDIOTS!!

This leads to the next information as Prof. Adam Levitin explained:

Financial harm? Yes. How much? Impossible to determine. Will it be considered? Not a chance. Welcome to Robosigning 2.0.

As if we were going to turn the right or left cheek to this and think all this bullshit would actually be “independent when the regulators let the banks hire the Foreclosure Fraud reviewers.

Once again more proof you’re being thrown under the bus!

p.s. anyone prior to 2009, you’re out of luck as well. AND we know there is thousands of you.


Below are the FAQ’s

[ipaper docId=71154619 access_key=key-mdtam8drwzevothfgsg height=600 width=600 /]


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Low Mortgage Rates Insufficent, Lenders Cry Foul Because of Repurchase Bad Mortgages from Fannie Mae and Freddie Mac

Low Mortgage Rates Insufficent, Lenders Cry Foul Because of Repurchase Bad Mortgages from Fannie Mae and Freddie Mac

Unreal and they wonder why anyone would do business with these fools. Perhaps the market won’t turn around because many not all lenders did fraudulent activities with these loans.

Seems they are trying to go back to the easy billions they are used to making.

They aren’t billionaires because they were hard working or smart 🙂


Government efforts to make lenders pay for soured mortgages may be keeping potential borrowers from record-low interest rates, slowing home sales and refinancing as banks tighten standards to avoid more demands for refunds.

Lenders are insisting on higher credit scores and more documents than required by the Federal Housing Administration and government-backed Fannie Mae and Freddie Mac. Quicken Loans Inc. and Vision Mortgage Capital are among firms saying they are increasing scrutiny of would-be borrowers in response to pressure to cover losses incurred on U.S.-backed housing debt.

“You’ve got to take measures now to protect yourself,” John B. Johnson, chief executive officer of Birmingham, Alabama- based MortgageAmerica Inc., said during a panel discussion this month. Demands that lenders repurchase bad mortgages from Fannie Mae and Freddie Mac are “casting a pall over the market. I fear that it will face a much longer recovery because of this.”


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Cummings Commends FHFA Decision to Terminate Faulty Foreclosure Attorney Networks

Cummings Commends FHFA Decision to Terminate Faulty Foreclosure Attorney Networks

Washington, DC (Oct. 18, 2011) – Today, Congressman Elijah E. Cummings, Ranking Member of the Committee on Oversight and Government Reform, responded to an announcement by the Federal Housing Finance Agency (FHFA) that it has instructed Fannie Mae and Freddie Mac to begin “transitioning away” from their use of designated foreclosure attorney networks to a system under which “mortgage servicers select qualified law firms that meet certain minimum, uniform criteria.”

“Several of these law firms were able to engage in abusive and illegal behavior that violated the rights of borrowers, in part because of deficient oversight by FHFA, Fannie Mae, and Freddie Mac,” said Cummings.  “In light of the extensive problems recently documented by the FHFA Inspector General, I urged FHFA to seriously consider terminating these attorney networks, and it appears they are implementing my request.”

“I remain concerned, however, that FHFA has not provided specific details about how mortgage servicers will select and oversee law firms to ensure that abusive behavior is prevented,” added Cummings.  “I will continue my oversight efforts to ensure that specific measures are in place to require mortgage servicers to properly oversee the actions of law firms conducting foreclosure proceedings, including those involving mortgages owned or backed by the government sponsored enterprises.”

On February 25, 2011, Ranking Member Cummings launched a major investigation into abuses and illegal activities by mortgage servicing companies, including wrongful foreclosures, inflated fees, and the filing of improperly executed legal documents during the foreclosure process.  As part of that investigation, Cummings sent a letter asking the FHFA Inspector General to examine “widespread allegations of abuse by private attorneys and law firms hired to process foreclosures as part of the ‘Retained Attorney Network’ established by Fannie Mae.”

On September 23, 2011, the FHFA Inspector General issued a report concluding that Fannie Mae and its regulators, including FHFA, were alerted repeatedly to serious problems with the legal firms in Fannie Mae’s retained attorney network (RAN) beginning as early as 2003, but failed to take corrective action.  The Inspector General reported that “FHFA did not begin to act on foreclosure abuse issues involving Fannie Mae’s RAN until mid-2010,” despite “multiple indicators of foreclosure abuse risk prior to 2010 that could have led FHFA to identify and act earlier on the issue.”

On October 3, 2011, Cummings sent a letter to FHFA Acting Director Edward DeMarco requesting additional documents and information regarding these oversight failures.  Cummings requested that the agency “give serious consideration to terminating the existing Fannie Mae Retained Attorney Network program.”  He also requested that “FHFA take immediate and decisive action to remedy these failures and ensure that no additional borrowers suffer similar abuses.”


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Fannie, Freddie Said to End Lawyer “Foreclosure Mill” Networks Amid Mortgage Woes

Fannie, Freddie Said to End Lawyer “Foreclosure Mill” Networks Amid Mortgage Woes

Nothing last forever… But now the servicers get to make the call on who they want to use… Already see the drama unfolding.


Fannie Mae and Freddie Mac will phase out their foreclosure attorney networks in the wake of the so-called robo-signing scandal, according to two people briefed on the plan.

The Federal Housing Finance Agency, which regulates the mortgage companies, may make the announcement as soon as this week, said the people, who spoke on condition of anonymity because the matter isn’t public.

Fannie Mae has required the mortgage servicers handling its loans to use its Retained Attorney Network for foreclosures and bankruptcy cases. Some lawyers were accused by lawmakers, regulators and consumer groups of mishandling paperwork for evictions and foreclosures, including falsifying signatures on court affidavits. The dispute led many mortgage servicers to suspend foreclosure activity last year.



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Robosigning 2.0: Mortgage Foreclosure File Reviewers

Robosigning 2.0: Mortgage Foreclosure File Reviewers

As I’ve said it before, Don’t expect this bunch of dog sh*t to benefit you.

Prof. Adam Levitin wrote a devastating and I mean devastating piece of you guessed it, yours truly, Robo-Signing 2.0 that demands an investigation.

Don’t fall for any of these so called regulators to help you. It’s NEVER going to happen! Get it through to your head.

Oh and by the way …Funny sh*t is, Citi Group just recently made a call like this. But go read Prof. Levitin’s piece and come back to check Citi’s Help Wanted ad to “Sign legal affidavits for purpose of foreclosure hearings.”

Credit Slips-

Do you have what it takes to be a Mortgage Foreclosure File Reviewer Level 2?  An intrepid researcher forwarded to me a job ad for a mortgage foreclosure reviewer who will be reviewing bank foreclosures per the OCC/Fed servicing fraud consent orders.

[Credit Slips]

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Regulators Let Banks Hire Friendlies for ‘Independent’ Foreclosure Fraud Reviews

Regulators Let Banks Hire Friendlies for ‘Independent’ Foreclosure Fraud Reviews

Now C’mon don’t act too surprised.

We know what’s going to be the end result and it’s not going to benefit the 99%.

American Banker-

Can you count on the emperor’s handpicked ministers to tell him when he’s naked? Banking regulators seem to think so.

The April consent orders against mortgage servicers let the companies pick one or more professional-services firms to review their foreclosure actions for abuses and report the findings to the agencies.

Allowing the banks to choose their own judge, jury, and jailer presents almost untenable conflicts of interest. A


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Secret Docs Show Foreclosure Watchdog Doesn’t Bark or Bite

Secret Docs Show Foreclosure Watchdog Doesn’t Bark or Bite

by Paul Kiel ProPublica, Oct. 4, 2011, 11:26 a.m.

Why has the administration’s flagship foreclosure prevention program been so ineffective in helping struggling homeowners get loan modifications and stay in their homes? One reason: The government’s supervision of the program has apparently ranged from nonexistent to weak.

Documents obtained by ProPublica – government audit reports of GMAC, the country’s fifth largest mortgage servicer – provide the first detailed look at the program’s oversight. They show that the company operated with almost no oversight for the program’s first eight months. When auditors did finally conduct a major review more than a year into the program, they found that GMAC had seriously mishandled many loan modifications – miscalculating homeowner income in more than 80 percent of audited cases, for example. Yet GMAC suffered no penalty. GMAC itself said it hasn’t reversed a single foreclosure as a result of a government audit.

The documents also reveal that government auditors signed off on GMAC loan-modification denials that appear to violate the program’s own rules, calling into question the rigor and competence of the reviews.

Some of the auditors’ mistakes are “appalling,” said Diane Thompson of the National Consumer Law Center, an advocacy group. “It suggests the government isn’t taking the auditing process seriously.”

In a written response to ProPublica questions [1], a spokeswoman for the Treasury Department, which runs the program, denied there were serious flaws in its oversight system, calling it “effective and unprecedented in many ways.”

The audits of GMAC, though revealing, give only a limited view into the program, because the Treasury has refused to release the documents for other servicers. For more than a year, ProPublica has sought the audits for ten of the largest program participants through a Freedom of Information Act request. The Treasury provided only GMAC’s audits, because the company consented to their release. ProPublica continues to seek all of the reports.

Abuses of the foreclosure process, in which banks and mortgage servicers cut corners or even created false documents [2] to move trouble borrowers out of their homes, have been extensively documented [3], along with failures by government [4] to regulate the industry. But the lapses revealed in the documents obtained by ProPublica stand out because they occurred within the government’s main effort to prevent foreclosures, the Home Affordable Modification Program, or HAMP.

Oversight Shrouded in Secrecy

For HAMP’s first two years, the government offered very little public detail about its oversight efforts. It was virtually impossible for the public – or even Congress – to know how well the banks and mortgage servicers were complying with the government’s effort to prevent struggling homeowners from losing their homes. Those years were crucial, because that’s when the vast majority of homeowners eligible for a modification – about three million – were evaluated by servicers.

The documents obtained by ProPublica show auditors finding serious problems at a major servicer during that time. Instead of publicly revealing the findings, Treasury chose to privately request that GMAC fix the problems.

“For two years, they’ve known how abysmal servicers were performing and decided to do nothing,” said Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, better known as TARP or the bank bailout, which provided the money for HAMP.

“It demonstrates that if you have a set of rules for which compliance is completely voluntary and no meaningful consequences for those who violate them, having all the audits and reviews in the world are not going to make a bit of difference,” he continued. “It’s why the program has been a colossal failure.”

Treasury continued to release few details about its audits until this June, when it began publishing quarterly reports based on the audits’ results. The public report showed what Treasury called “substantial” problems at four of the ten largest servicers – Bank of America, JPMorgan Chase, Wells Fargo, and Ocwen – and Treasury for the first time [5] withheld taxpayer subsidies from three of them.

Mortgage servicers that signed up for the program agreed to follow strict guidelines on how to evaluate struggling homeowners seeking a reduced mortgage payment. In exchange, they’d receive taxpayer subsidies. But as we’ve reported extensively, the largest servicers haven’t abided by the guidelines [6]. Homeowners have often been foreclosed on in the midst of review for a modification [7] or been denied due to the servicer’s error. For many homeowners, navigating what was supposed to have been a simple, straightforward program has proven a maddening ordeal [6].

Meanwhile, HAMP has fallen dramatically short of the administration’s initial goals to help three to four million homeowners. So far, fewer than 800,000 homeowners have received a loan modification through HAMP, less than one in four of those who applied [8].

Part of the $700 billion TARP, HAMP launched in early 2009 with a $50 billion budget to encourage loan modifications by paying subsidies to servicers, investors, and homeowners. But in another example of how the program has fallen short, only about $1.6 billion has gone out so far [9].

GMAC said it agreed to release its audits under the program because the company “believes in honoring the spirit of the Freedom of Information Act process” and “elected to be transparent on our work with the [modification] program,” spokeswoman Gina Proia said.

GMAC has changed its parent company’s name to Ally Financial, but its mortgage division is still called GMAC. The government owns a majority stake in Ally, because it rescued the company with TARP funds, but both the company and the Treasury said that didn’t factor into the company’s decision to allow the documents to be released.

ProPublica contacted all nine servicers who objected to the reports’ release. All either declined to comment on why they wanted the audits kept secret or defended keeping them out of the public domain by saying the reports contained confidential information. Collectively, these companies have so far been paid more than $471 million in cash – dubbed “servicer incentive payments” – through the program. They are eligible for hundreds of millions more. The country’s four largest banks – Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup – are also the largest servicers of mortgage loans.

In its written response, Treasury’s spokeswoman said it agreed to withhold the records in part because they could undermine “frank communications between mortgage servicers and compliance examiners” and hurt the program’s effectiveness. The department declined to provide either redacted versions or an index of the documents.

Early Reviews “Useless” and Flawed

Since the program’s beginning, homeowner advocates have wondered where HAMP’s watchdog was [10] and why it was having so little effect. That watchdog is Freddie Mac, tapped by Treasury in February 2009 and working under a contract worth $116 million and rising. The Freddie Mac unit, now staffed with 121 employees and employing about 150 more through contractors, is supposed to regularly audit servicers in the program to make sure they are following the rules. Treasury is ultimately responsible for deciding whether to punish a servicer, but it relies on auditors’ findings to make that decision.

It took several months for the unit to even get off the ground. In August of 2009, Treasury rejected Freddie Mac’s first reviews of servicers as inadequate [10], because they were “inconsistent and incomplete” and its staff was “unqualified,” according to a report by the TARP’s special inspector general. Freddie Mac promised to improve. That process took several more months.

As a result, for the program’s crucial first eight months there effectively was no watchdog. Nationwide, servicers filed to pursue foreclosure on about two million loans during that time.

Treasury disputed the idea that there was no watchdog for those months, saying that auditors had performed “readiness reviews” of servicers as early as the May of 2009, one month after the program began. The documents obtained by ProPublica show, however, that Freddie Mac’s auditing unit, called Making Home Affordable – Compliance (MHA-C), didn’t issue its first report for GMAC until early December, 2009 [11].

That audit was a modest effort that involved collecting a sample of 323 loans handled by GMAC and determining whether they’d been properly reviewed for the program. Because of the delays in starting the reviews, the report was based on a sample of loans that was five months old [12]. Such delays continued into 2010. Another Freddie Mac review, completed at the end of March 2010, was based on GMAC loans selected in October of the previous year [13].

The delays make those reviews “largely useless to homeowners,” said Thompson of the National Consumer Law Center. If a homeowner lost the house to foreclosure in July, it wouldn’t help to have an auditor notice that several months later, she explained.

The December 2009 audit notes that GMAC might have already foreclosed on loans auditors had flagged as potentially mishandled, but didn’t order remedial steps. It only requests that GMAC not take “further action.” [14]

GMAC said it had never reversed a foreclosure action as a result of a HAMP audit. ProPublica asked the other nine servicers who objected to the audits’ release the same question. American Home Mortgage Servicing, the only other servicer that answered the question, said it had also never reversed a foreclosure action due to a HAMP audit.

American Home handles about 384,000 loans [15], putting it among the ten largest servicers in the program.

A Treasury spokeswoman said that auditors have reviewed more than 50,000 loan files, but did not directly answer whether a servicer had ever reversed a foreclosure action because of a HAMP audit. Where auditors have found problems, she wrote, the department has “required servicers to take steps to tighten controls” and “re-evaluate any borrowers who may have been potentially impacted.”

In early 2010, around the same time that the auditing unit was issuing its first reports, auditors complained that servicers’ lack of responsiveness to their requests was hampering their efforts. Getting the right documents from servicers was “a cumbersome process,” the head of Freddie Mac’s audit team, Paul Heran, said in February 2010 at a mortgage industry conference. It seemed, he added, that servicers often relegated responding to the auditors to low-level staff who didn’t understand the requests. Another manager in the unit, Vic O’Laughlen, said servicers tended to respond with “at best fifty percent of what we’re expecting to see.”

However uncooperative the banks and mortgage services may have been, Freddie Mac’s auditing reports contain errors that call into question their reliability.

Every few months, the auditors examine a sample of the servicer’s loans that have been denied a HAMP modification to check whether the denials are legitimate. In each GMAC report reviewed by ProPublica, auditors found that the servicer had, with very few exceptions, given the homeowner fair and appropriate consideration. But among the justifications listed in the audits are some that violate the program’s rules or simply don’t make sense.

For instance, the December 2009 review says that 35 of the 247 loans auditors reviewed were denied because the homeowner was “less than 60 days delinquent.” [16] In the report, auditors said that was the right decision in all but one case. But being less than 60 days delinquent is never on its own a legitimate reason for a servicer to deny a modification, according to the program rules. Homeowners are eligible for a modification even if they’re current on their loans, as long as they can show they’re in imminent danger of defaulting.

Another example: Auditors agreed that GMAC had correctly denied a homeowner because of a failure to sign a trial modification offer by Dec. 31, 2012, HAMP’s end date [17]. That makes no sense, because the review took place in 2009. Treasury’s spokeswoman said this was a typo and that the homeowner was denied for a completely different reason.

There are several other examples in later reports of auditors signing off on denial reasons that have no apparent basis in the program’s rules. For instance, auditors cited “grandfathered foreclosure” [18] as a legitimate reason for some denials. The spokeswoman said such loans had been in the foreclosure process before GMAC signed up for the program, but the program rules explicitly stated at the time that such loans were eligible.

When ProPublica asked GMAC if it had denied homeowners loan modifications for these reasons, the company said it couldn’t comment because auditors, not GMAC, had generated those descriptions of why homeowners had been denied. In some cases, Proia said, the descriptions were simply wrong: GMAC had never denied homeowners simply because they weren’t 60 days delinquent.

But Treasury defended the questionable denials, and in so doing raised even more questions. For instance, the spokeswoman said HAMP “does not specifically require servicers to evaluate loans that are less than 60 days delinquent.” But Treasury’s official guidance to servicers said such borrowers “must be screened.”

“It makes you wonder if the Treasury even knows the rules for their own program,” said National Consumer Law Center’s Thompson.

A Congressionally-appointed panel, among others, has pointed to a fundamental flaw in the way the oversight was carried out: Auditors have had no direct contact with homeowners. The program has been dogged by servicers’ inadequate document systems. Borrowers have long reported [6] faxing and mailing the same documents over and over, because servicers kept losing them. Servicers have denied about a quarter of all modification applications due to an alleged lack of documentation [19]. Because HAMP’s auditors do not contact borrowers, there’s no way for them to ascertain if a denial for inadequate documentation was correct.

In response to this criticism from the Congressional Oversight Panel for the TARP last December [20], Treasury said auditors did not contact homeowners to avoid giving them added stress. The panel rejected that reason, saying that contacting borrowers was “critical to assessing the accuracy of a servicer’s determination.”

Instead of talking with borrowers, auditors conduct on-site reviews of mortgage servicing companies, Treasury’s spokeswoman said in her written response to ProPublica. Treasury believes that focusing “on servicer processes and internal controls is the most effective deployment of our compliance efforts,” she wrote.

Detailed Audit Shows Serious Problems

It wasn’t until July 2010, sixteen months after HAMP launched, that the unit performed their first major audit of GMAC. The review included a visit to GMAC’s offices and a detailed review of a sample of loans.

The report enumerated various rule violations, including in how GMAC evaluated homeowners for modifications. GMAC’s practice was to begin the foreclosure process too quickly [21]: The program required the servicer to give the homeowner 30 days to respond to a trial modification offer, but GMAC’s procedure was to wait only 20.

GMAC’s Proia said no homeowners were “negatively impacted by this issue.”

Auditors also found that GMAC was regularly miscalculating the homeowner’s income. In a review of 25 loan files of homeowners who had received a modification, the auditors said 21, or 84 percent, involved a miscalculation of income [22]. Since the borrower’s income is a key factor in whether the homeowner qualifies for a modification, the high error rate raises obvious questions about whether GMAC was accurately evaluating homeowners’ applications.

Asked about this the frequent income miscalculations, GMAC’s Proia said that the “issue was identified in the early stages of the program,” that calculating the borrower’s income is a “complicated process,” and that GMAC has improved since the mid-2010 review – an assertion backed up by recent audit results published by the Treasury.

The July 2010 review also found that GMAC had been aware of certain problems such as “incorrect income and expense calculations,” [23] but had not fixed them. Proia said the company does its best to fix problems when it becomes aware of them.

Penalties: Late and Weak

Typical of the Treasury’s oversight of the program, GMAC was never penalized for any of the rule violations. For the first two years of the program, Treasury officials publicly threatened servicers with the possibility of penalties, but instead followed a cooperative approach [24]. When auditors found problems, servicers were asked to fix them.

The documents illustrate that back and forth. In response to the auditors’ findings, GMAC was required to develop an “action plan.” GMAC refused to provide the action plan to ProPublica and recommended seeking it and other similar documents by filing a Freedom of Information Act request with the Treasury.

Treasury has sent mixed messages about its ability to penalize banks over the course of the program [24], threatening “monetary penalties and sanctions” in late 2009, and then later saying it lacked the power to enforce such penalties. Treasury finally departed from its cooperative approach this June, when it withheld incentive payments [5] from three of the top ten servicers. (GMAC was not among them.) The companies would not receive the public subsidies for completing modifications until they made certain changes. The companies were cited for some of the same problems for which auditors had criticized GMAC, such as regularly miscalculating the borrower’s income. JPMorgan Chase, for instance, had erred in estimating income in about a third of the homeowner loan files reviewed.

The punishment hasn’t had much sting to it. Two of the three companies had their incentive payments restored when Treasury’s most recent report [25] declared they’d improved. Only Chase and Bank of America, the country’s largest servicer, would continue to have their incentives withheld, Treasury said.

But while those incentives have slowed, they have not stopped, according to Treasury’s monthly TARP reports [26]. Since June, when Treasury first announced it would be withholding incentives, Bank of America has received $2.5 million in taxpayer incentives. While that’s a steep reduction from the roughly $7.5 million it had been receiving monthly, the bank is supposed to be receiving nothing. Chase received $404,000 during that same time.

Treasury responded that it has programs to encourage modifications on both first and second mortgages, and that the payments Bank of America and Chase received were related to second mortgages. “Current system limitations” meant the Treasury couldn’t withhold these payments, according to the Treasury spokeswoman. Treasury is working to fix the problem, she said.


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Nevada AG puts Bank of America on notice over Foreclosure Fraud

Nevada AG puts Bank of America on notice over Foreclosure Fraud

Vegas Inc

Call it Nevada’s version of David versus Goliath.

As foreclosures continue and homeowners cry foul against lenders in their bids to stay in their homes, Nevada’s Attorney General Catherine Cortez Masto is taking on Bank of America in federal court. And the issue is going to heat up as Cortez Masto’s office investigates BofA and other parties in the foreclosure process. She says criminal charges are likely coming to the industry soon, which could provide more ammunition for her foreclosure fraud case.


© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

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Foreclosure Complaint? Stand By for New Toll-Free Number

Foreclosure Complaint? Stand By for New Toll-Free Number

Like everything else….umm… oh yea! Those things called modifications. This ain’t gonna happen either!



It probably won’t include “1-800-ROBO,” but big banks are preparing to launch a toll-free number to find consumers harmed by problems in foreclosure processing.

The effort to find consumers is an outgrowth of the controversy over so-called robo-signing and other problematic foreclosure practices. Last spring, regulators ordered major banks and thrifts to overhaul their foreclosure practices, finding that 14 lenders filed foreclosures with improper documentation and lacked sufficient staff to properly handle distressed borrowers. The banks have now picked independent consultants to identify any borrowers who were harmed by foreclosure-processing problems.


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Banks May Fight Banks as Mortgage Securities Investors Seek Class Status

Banks May Fight Banks as Mortgage Securities Investors Seek Class Status

Just as in Abigail C. Field’s Fortune piece “Fighting a foreclosure suit? Hope for the right judge”, the same may be true for these investors…


Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and other banks may pay more to resolve claims over their alleged roles in the collapse of a $2.3 trillion mortgage- backed securities market if sophisticated investors are allowed to sue as a group along with less savvy ones.

Class-action status allows investors to pool financial and legal resources, giving them greater leverage to win larger settlements or verdicts. The banks, however, have a court ruling on their side that may help fend off such blockbuster cases. It says class status is barred because some investors are too sophisticated — in fact, because some of them are other banks, including JPMorgan.


© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

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The Mortgage Crisis, MERS, and Chapter 13

The Mortgage Crisis, MERS, and Chapter 13

The Mortgage Crisis was created by Mortgage Lenders, Banks, and Financial Institutions through the use of sub-prime lending and mortgage-backed securities. This article explores this crisis within the context of bankruptcy by examining sub-prime lending, mortgage securitization, MERS, and the situations that the U.S. Bankruptcy courts and trustees have dealth with the fallout of the mortgage crisis first hand.

This article was the 2010-2011 National Association of Chapter 13 Trustees Law School Writing Competition Winning article. Its full citation is:

Michael Wennerlund, “The Mortgage Crisis, MERS, and Chapter 13,” NACTT Quarterly, Fall, Vol. 23, No. 4, 28-35

[ipaper docId=64090511 access_key=key-2dyrult9is7hch0hywml height=600 width=600 /]

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