A chilling piece in the Friday New York Times gives a hint of the appalling illegality that was and is being practiced against defenseless mortgage holders as the big banks drive a Shermanesque swath of looting and pillaging through the country’s middle and lower-middle classes. It explains that the much trumpeted ‘review’ of foreclosure abuse by the Office of the Comptoller of the Currency (OCC), the most blatantly captured of the faux regulatory agencies, has been hurriedly dismantled. Instead, millions of homeowners will get a token payment, and the banks will get a clean slate.
Here’s an excerpt from the article entitled [take note] ‘Bank Deal Ends Flawed Reviews of Foreclosures’:
‘Christine Lucier, 32, of Northbridge, Mass., received a letter in March 2012 from Bank of America notifying her that she was behind on her mortage payments and in foreclsoure. She thought she was having a nightmare because the bank had evicted her in 2008. She learned that the bank had inexplicaibly reversed her foreclosure in November 2010 [without telling her]. Since then, the two-bedroom colonial house had been looted by vandals and stripped of its wiring and copper piping. “My life has been turned upside down, and I have to go through foreclosure again”, said Lurie.’But the article doesn’t begin to capture the full extent of the economic terrorism practiced against home-buyers and completely misses the intent of the phony ‘foreclosure review’ exercise, which the economic and financial blogs warned about from the start. Perhaps Jessica Silver-Greenberg, the Times’ writer doesn’t know that background, or perhaps she can only hint at what she sees perfectly well—that the review process was set up by Obama/Geithner to fail.
On January 4 Naked Capitalism published a guest column from someone calling himself Luxtexente who says he was one of those hired by the OCC to review foreclosures. The full post is available here under the headline ‘“Independent” Reviews Were Controlled by Banks, Which Suppressed Any Findings of Harm to Foreclosed Homeowners’.
Luxtexente explains that he, like many others involved, was a fully qualified loan reviewer with all the experience and technical knowledge needed. Hundreds of highly qualified real estate professionals and even lawyers signed up to participate in the massive file review believing that they had a mandate to fix abuses and errors to benefit some of the millions of people whose lives had been wrecked by the 2008 apocalypse. He then demonstrates how the OCC and its banker overlords systematically gutted the entire process.
‘Our instructors were from the banks and lenders. I didn’t like that idea. . . . However, the training was interesting, and seemed straightforward, review the file, find the problems, and report them so they could be fixed. The goal, make wronged borrowers whole again as nearly as possible or so we thought.Then there was the issue of who was supervising the ‘independent’ reviewers:
‘After the training we arrived on the “floor” to begin a more in-depth training. We learned at that point that there was nothing ready for us to work on, but this nothing paid well, we could wait. . . . We began in January, by April there were 500 of us at the location I was in, and it was projected to reach 750 by June. Forty of us were actually reviewing files. [Note this ‘waste’ of staff time and money—it will be important later.]
‘This is where we began to see the sham of the project. By the time I began reviewing files, there were on 57,000 files to review. The trigger for a review was that a borrower had to file a written complaint with the OCC. The problem with getting people to write a complaint was that all the advertising was direct mail to their homes and only to people that had been foreclosed on between January 2009 and December 2010. At a meeting involving the entire staff across the country (by phone) the question was asked, “Why just direct mail?” The answer: “TV, radio and print media would attract too many of the wrong people, and the banks and lenders didn’t want that.” When it was mentioned that it was two to three years after the borrower had been evicted, we were told that “they should have put in a forwarding address with us”. I was dumbfounded. How could they expect people who lost everything to the bank to keep updating their addresses with the bank? It made no sense. But we kept plugging away at our task knowing now the battle was going to be tougher than we thought’.
‘Any findings we made came directly under the scrutiny of the bank. Any arguments over our findings and whether they should be changed or not could and often did result in termination from the program without cause or warning, and we had no recourse because we were contractors’.
Then getting to the meat of the review process, Luxtexente and his peers quickly realized that the procedures were actually taken from a long-lost text by Franz Kafka:
‘The situation was becoming heated as Claim Reviewers (as we were called) began finding more and more issues of law, not to mention, incompetence, and immorality and poor judgment. . . . However, the bank and the OCC did find a solution. Take the questions out of the tests we were doing that asked about issues of law. So one test that had 2200 investigative questions (there are about a dozen tests for a file review) now became about 550 questions. Issues of law were removed. At another of our group meetings we were told that if a borrower did not specifically cite the law or statute that was violated in their complaint that we were not to address a violation of law found in the file as it was now irrelevant to the issues at hand. When the questions was asked “how is a borrower going to know if a specific law or statute was violated since they are not trained in the law?, the answer was that we only address what the borrower specifically complained about’. [emphasis added]
We are beginning to see the radical engineering of the ‘review’ process that took place under the watchful eye of Geithner and Obama: make it a Potemkin village that looks nice enough to pass at a news conference, but make no attempt to actually repair harm to individuals.
It gets worse:
‘The complaint form also didn’t mention to the borrower that they had to be specific about issues of law [even though, as Luxtexente says, without that specificity, the reviewer cannot act—so there are rules, you just don’t get to know what they are].
‘For example, in one case I reviewed the borrower paid approximately 25K to reinstate his mortgage. Then he began to make his mortgage payments as agreed. Each time he made a payment, the payment was sent back stating he had to be current for the bank to accept a payment. He made three payments and each time the response was the same. Each time he wrote and called stating he had sent in the $25K to reinstate the loan and had the canceled check to prove it. After several months the bank realized that they had put the 25K in the wrong account. At that time that notified him that they were crediting his account, but because of the delay in receiving the reinstatement funds into the proper account, he owed them more interest on the monies, late fees for the payments that had been returned and not credited and that he was again in default for failing to continue making his payment. The bank foreclosed when he refused to pay additional interest and late fees for the banks error. I was told that I shouldn’t show that as harm because he did quit making his payments. I refused to do that’.
‘More often than not a borrower would be foreclosed on even though the bank had said they could apply for a modification if they would send in the financial paperwork required. The borrower would do this, 2, 3, 4, 5, 6 or more times, and the bank would “loose” the paperwork time and time again, until the house was finally foreclosed on. The borrowers would call, write, and call immediately after faxing the paperwork, be told it was received only to be denied later because they failed to send in any paperwork. The banks argument was that there was no harm to the borrower because they didn’t send in the paperwork, even though more often than not with a little searching the paperwork would be found in the system somewhere’.
Luxtexente lists a half-dozen similar cases; the accounts are interminable, painfully similar, and could be multiplied by hundreds of thousands of cases nationwide.
How did the contracted reviewers react to this obvious manipulation? Luxtexente says any signs of resistance were met with threats:
‘So many times I was told to not argue because I could be let go without notice or cause, it was difficult to hold my tongue. [Incidentally, the reviewers were ALL let go without notice this week anyway.] Most people would change the results and simply make notes in the system about being ordered by management to make the changes. But the banks and lenders control the notes. Others left the position’.Of course, if the institutions being ‘reviewed’ are in charge of the review and could be found liable for monetary damages or even criminal charges, it’s not hard to imagine exactly this outcome. One would have to think Barack Obama is not a smart man to assume this was an accident.
Now it also becomes clear why the reviewers like Luxtexente were made to sit around twiddling their thumbs for several months while receiving hefty paychecks, rather than begin the file review process. After pumping millions of dollars into the ‘review’ with scanty results, the banks could then argue that a ton of money was being wasted that could much more profitably be passed along to the injured homeowners, wouldn’t that make much more sense? The advantage was that it would all be a muddle with specifics swept under the rug, which was much better for the banks at whatever cost.
And thus the settlement announced Friday in which the class of homeowners will all be tossed a few hundred bucks whatever their circumstances, the ‘review’ process is junked as impractical and messy and too complicated and not worth the bother, the banks will write a business-as-usual check, get a wrist-slap, and then Geithner and Obama will say, We Did the Best We Could, Stop Whining.
How was it so easy to generate this massive PR operation on the public? I repeat, it was set up to produce these results. The reviews were to be paid for by the banks themselves, rather than by the regulatory agencies. That might sound good at first (yeah, make the bastards pay), but it enabled the banks to assert control over the whole process, which is what Obama wanted. Given that banking regulators make a fraction of what they could earn in the private (banking) industry, it was a built-in conflict of interest in a regulatory arena that is already suffering from fatal capture.
So that was the mechanical failure incorporated from the start. But as the account reveals, explicitly setting aside the law was also part of the package. You can’t make up this stuff, but we should take note of it because it is exactly the same procedure used to justify torturing defenseless prisoners and keeping them locked up in dungeons without charges or trials.
We think we get security from harm in exchange for permitting the rule of law to be suspended Kathryn Bigelow-style. Instead, we get a ruling elite now empowered to turn us into slaves. This is one result.