Bank Deal Ends Flawed Reviews of Foreclosures

[ElNono]

http://www.nytimes.com/2013/01/11/business/bank-deal-ends-flawed-reviews-of-foreclosures.html?hp

[Winehole23]

now the banks will say, with a totally straight face, that there was no finding of criminal wrongdoing, no mortgage fraud. in the narrow technical sense, they will be correct

[ElNono]

slap in the wrist per par...

[boutons_deux]

Lew, also from investment banking/Wall St, won't be any better than Geithner.

The financial industry is one of primary corrupters, OWNERS government, but the tea-baggers and right-wingers insist that GOVT alone is the primary villain that causes ALL US's problems.

[TeyshaBlue]

slap in the wrist per par...

yup. Nice going, White House.

[TeyshaBlue]

Hope! Change!

[boutons_deux]

As guilty as any of them, WF

Wells Fargo Profit Jumps 24% in Quarter, Driven by Mortgage Gains

Wells Fargo reported $5.1 billion in profit for the fourth quarter on Friday, a 24 percent increase, driven by the bank's lucrative mortgage business.

Seizing on low-interest rates that have spurred a flurry of refinancing activity, the bank again notched record profits. For the last 12 quarters, profits at the bank have increased.

Still, Wells Fargo's profit from residential mortgages could wane this year if the Federal Reserve halts its extensive bond buying spree.

http://mobile.nytimes.com/2013/01/11/blogs/wells-fargo-profit-jumps-24-percent-in-fourth-quarter-driven-by-mortgages.xml;jsessionid=972B20090F29C4301AE11F27E 93E81FF?f=23

[ElNono]

Hope! Change!

VRWC! GFY! :lol TB

[TeyshaBlue]

VRWC! GFY! :lol TB


http://i3.photobucket.com/albums/y64/teyshablue/creepy-smile-o.gif

[Winehole23]

The money is being distributed with no regard to whether a borrower suffered harm. In some ways, this is the sorriest part of the whole episode. The foreclosure review never answered the key question: which borrowers had legitimate claims against their bank and which didn’t. Thus, the settlement doesn’t make that distinction. If you lost your house in 2009 and 2010, you are going to get money — whether the bank was culpable or not. “The notion of error is not involved in this settlement,” conceded Hubbard.
As a result, those who really were truly harmed by bank behavior will be shortchanged. As Karen Petrou, the well-known banking consultant, puts it, the government has “come up with something that gives every borrower — maybe — a pittance and leaves the truly hurt — and there were many — as much in the lurch as before.”


This is hardly the only time in recent months that a settlement that is publicized as righting a wrong instead hands money to people who were never victimized. Think back to the $4.3 billion fund (http://www.nytimes.com/2010/12/23/nyregion/23health.html) established by Congress to compensate people who became sick because of their exposure to toxic dust created by the 9/11 attacks. Even though there is no scientific evidence (http://www.nytimes.com/2012/12/19/nyregion/no-clear-link-between-cancer-and-9-11-debris-new-york-health-dept-study-finds.html) that the dust caused cancer, the government added cancer to the list of diseases that would be compensated. The result will be less money for those who truly did become sick because of their exposure to the 9/11 aftermath.


Or take Toyota, which recently paid $1 billion to settle a lawsuit (http://www.nytimes.com/2012/12/27/business/toyota-settles-lawsuit-over-accelerator-recalls-impact.html) claiming that an electrical flaw caused some accelerators to stick — even though there turned out to be no evidence to support that claim.
People who do these kinds of settlements regularly say that the world has become so complicated that, more often than not, it is simply too expensive to figure out who was harmed and who was not. So best just to throw a little money at everybody and make the problem go away.


That is what the federal government did last week in its settlement with the banks. It’s nothing to be proud of.

http://www.nytimes.com/2013/01/15/opinion/nocera-the-foreclosure-fiasco.html?_r=0

[Winehole23]

In the wake of the financial crisis, banks mishandled foreclosures on such a scale that regulators stepped in. Led by the Office of the Comptroller of the Currency, they ordered banks to hire independent outsiders to identify homeowners who were wrongly foreclosed on and to provide compensation.


Instead of righting a large-scale wrong, however, the "lookback" reviews have become nearly as controversial as the original servicing blunders. Consumer advocates have blasted the reviews as lacking in independence. They allege that regulators have allowed banks to subvert the program by choosing their reviewers, weighing in on whether borrowers were harmed and even appealing consultants' decisions.


Obscured in the feuding is an issue potentially even more troubling than the questions about the consultants' independence: the cost of running the reviews has spiraled out of all proportion to their potential benefits.


Designed to compensate wronged homeowners, the review programs are almost certain to deliver several times more cash to the consultants overseeing them. Bankruptcy filings by ResCap, the former GMAC mortgage servicer slated to be acquired by Ocwen, state that the company will pay consultant PricewaterhouseCoopers $12,500 to review each of 20,000 loans for a total cost of a quarter-billion dollars. Yet ResCap expects to pay only $35 million to $60 million to harmed homeowners.

http://www.americanbanker.com/issues/177_212/foreclosure-reviews-exorbitant-for-banks-gold-mines-for-consultants-1054069-1.html

[coyotes_geek]

Limiting payouts to those actually harmed limits the size of the pool of potentially thankful citizens. Instead of making the damaged whole, better to make them share that money with those who don't deserve it, thus maximizing the number of people who can get a warm-fuzzy and celebrate the benevolence of their leaders for having "done something".

[Winehole23]

ugh.