Field on Foreclosure Fraud Settlement

As always, Abigail Field is a must-read in her ongoing coverage of the 49 state and federal foreclosure fraud immunization settlement. The fact that the settlement was approved by a federal judge with no hearings into it is both disappointing and truly sickening. Of course, as Field notes, the lack of transparency in this settlement is par for the course:

On Thursday, April 5th U.S. District Court Judge Rosemary M. Collyer announced she had decided to sign off on the ”$25 billion” Mortgage Settlement. By “announced”, I mean she signed the consent orders all our major law enforcers and the biggest bankers had agreed to, and entered them into the record. Judge Collyer didn’t actually say anything about the deal. She didn’t let anyone else say anything, either: she didn’t hold a public hearing on the deal.

In acting silently, Judge Collyer not only okayed the deal’s lousy terms, which institutionalize servicer theft and foreclosure fraud, she reinforced the incredibly poor public process that’s kept the enforcement fraud at the heart of the deal hidden. Deliberately hidden.

The rest of her post is a look at how the deal is presented in such a way as to misdirect people looking at it with allegedly new and beneficial mortgage servicing standards, while quietly institutionalizing and legalizing bank fraud and theft of homes. The problems with this are manifold, but just so you have a taste, here’s an excerpt of the post on the lack of clear and measurable servicing standards:

To recap: no one yet knows which servicing “standards” will take effect when, or if the deadlines will be extended as the deal allows. Until a standard is in effect, there’s nothing to measure compliance with. Worse, the the measuring process itself still has to be negotiated, so standards may take effect without a compliance process to verify implementation. Worst, the metrics let the servicers systematically steal from you and defraud the courts without risk of consequence. Heck, even if all servicing standards take effect before the deal expires, and all the work plans are finalized so that all the metrics are being computed, and banker theft rises to the level that a bank fails a metric, no penalty kicks in unless it’s the second quarter in a row that the bank failed that metric.

This deal has always been a shit sandwich. It’s just more clear now than ever before how big of a shit sandwich it is.


David Dayen has a post on the release of new servicing standards by the CFPB, which largely make the settlement’s standards irrelevant.

This would supersede the mortgage servicing standards from the foreclosure fraud settlement, as well as outlast them, because while the settlement standards expire after 3 1/2 years, the rules from the CFPB can be permanent. CFPB has statutory authority under Dodd-Frank to adopt rules for the servicing industry, so the vaunted “servicing standards” in the settlement will become mostly superfluous, or at least a stopgap.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s