A report issued by the Federal Reserve has found no wrongful foreclosures following an investigation into abusive mortgage practices. Though we must quickly note that the definition of “wrongful foreclosures” has been immediately called into question by consumer advocates. Nonetheless, the report is particularly puzzling at a time when 50 attorneys general and the Obama administration were at the precipice of brokering a settlement that would collect a paltry $20 billion from banks accused of flawed and fraudulent foreclosure practices.
The Huffington Post, citing information provided by members of the Fed’s Consumer Advisory Council, reported that immediate incredulity followed the findings, offered at a public meeting attended by regulators and Federal Reserve Chairman Ben Bernanke:
Consumer advocates on the panel criticized federal bank regulators for narrowly defining what constitutes a “wrongful foreclosure.” At least one member of the panel voiced concerns that the public would not take the Fed’s findings of improper practices seriously, since the wide-ranging review did not find a single homeowner who was wrongfully foreclosed upon.
The report, the article notes, “will only further the disagreements between bank regulators, whose top priority is ensuring the safety and soundness of the banking system, and law enforcement officials, who are concerned with reportedly widespread violations of state and federal bankruptcy and consumer protection laws during foreclosures.”
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2 thoughts on “Fed Report: No Wrongful Foreclosures By Banks?”
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Naked Capitalism has a wonderful takedown of this report, and notes that the administration has been vigorous in pursuing servicer abuse of military families. (https://www.nakedcapitalism.com/2011/03/administration-acts-on-mortgage-fraud-against-military-denies-it-exists-anywhere-else.html)
The post asks, and rightly, if it’s at all credible that all of these abuses were only visited upon military families.
Key quote: “Servicers are factories with highly routinized, bad procedures. If you see one abuse reported more than a time or two in the media, like force placed insurance or fee pyramiding, it is not a mistake. It’s policy.”
Also, the review was hardly wide ranging, and contained no validation of the claims in servicer paperwork. So of it found no wrongdoing.