Journalism in the Public Interest

Officials Warn That Foreclosure Probes May Prove Inadequate

Since flawed foreclosure practices by the nation’s biggest banks became last fall’s biggest scandal, federal bank regulators and the attorneys general of all 50 states launched simultaneous investigations. But there are an increasing number of warnings that neither of those efforts have addressed the full scope of the problem. 

Most notably, Elizabeth Warren, a senior Obama administration advisor, warned about the ongoing probes in Congressional testimony last week: “I think there’s a real question about whether there’s been an adequate investigation.”

After news about fraudulent and missing mortgage documentation raised questions last fall about the legitimacy of foreclosure actions, all 50 states launched a joint investigation. A group of federal bank regulators  launched a separate investigation. As we'd noted, some observers had low expectations for the federal investigation all along,  especially given the involvement of the historically bank-friendly Office of the Comptroller of the Currency. But Warren herself had once expressed higher hopes for the effort led by the states: "Right now my money is on the attorneys general," she'd told the L.A. Times last fall. Now nine months later, it seems she's not so confident about either.

Here’s where things stand. Federal bank regulators in April ordered the banks to submit plans for fixing their foreclosure and mortgage servicing practices, and those plans were submitted last week. (Read our rundown explaining the order.) Some banks are still negotiating with regulators on how to conduct the required foreclosure reviews and which outside law firms will be allowed to assist. As the Wall Street Journal reported today, regulators have questioned the independence of some outside firms, some of which had previously done consulting work for the banks or defended them in foreclosure suits. No fines have yet been imposed on the banks.  

And then there’s the ongoing investigation led by the state attorneys general—though its progress has long been unclear. From as far back as November, news organizations have been reporting that a settlement was near—only to have those reports be repeatedly shot down as rumors. What is clear, as we’ve noted, is that the negotiations have been strained by dissent. Some states have hesitated to dig deeper, favoring instead a quick settlement, according to the Huffington Post:

Some of the attorneys general, who asked to remain anonymous, said the government should use whatever evidence it currently has to extract as much money as possible, and then move on. The states lack the resources to conduct a comprehensive investigation that could take many more months, if not years, they said.

Banks seem to favor a quick settlement as well. "I would do anything to get it done today," J.P. Morgan Chase CEO Jamie Dimon told investors last week. "Fix it and move on." (Dimon might be exaggerating a bit when he said he'd do anything—he's said in the past that principal reductions, or reducing the total amount that borrowers owe, is "off the table.")

In Florida, after Republican Attorney General Pam Bondi took office in January, the state forced out two investigators who had led efforts to uncover foreclosure fraud and produced a lengthy report detailing the problems. Former Assistant Attorney General Theresa Edwards told the Palm Beach Post that without warning or justification, she and a colleague were asked to resign in May, despite there being a tremendous amount of investigating still left to be done. One of the dismissed investigators said she had concerns that many misdeeds would go undiscovered amid settlement negotiations.

Meanwhile, a handful of states have sought more aggressive action and warned they may break away from the broader probe. New York’s attorney general Eric Schneiderman—who’s conducting a separate probe into Wall Street’s role in the housing crisis—has said he’ll oppose any “quick, cheap settlement” of the multi-state probe, telling Rochester’s Democrat and Chronicle last month that the probe lacked both documents and depositions. A spokesman for the Iowa Attorney General's office pushed back on that claim, saying they have "more than adequate investigative material."

Elizabeth Ferrari

July 18, 2011, 4:36 p.m.

Warren, 10/2010: “My Money is on the AG investigation” in Foreclosure Fraud Mess

Last October, Elizabeth Warren glibly endorsed outsourcing Foreclosure Gate to the states.  What could possibly go wrong, 50 unfunded lawsuits brought by agencies with no power over the national banks.

Meanwhile, American families are going homeless as the Obama administration once again stands by and does nothing.  It’s sad to see Warren join the ranks of Obama’s good talkers.

I would never put Warren in the same ranks as Obama’s goodfellas.  Why didn’t he appoint her to head the Consumer Protection Agency?  Why has he refused to follow her advice and address her concerns?  No, Warren is her own woman and she should enjoy our support for being so.

Stephanie Palmer

July 18, 2011, 6:25 p.m.

sounds like a case of monkey see, monkey do…..Why do we pay any of these prosecutors if they don’t do their job. Maybe they should be on piece work.

The common wisdom for why Obama did not nominate Elizabeth Warren is that she could not get confirmed.  Baloney.

He is afraid of her.  She has an independent streak, and ha can’t be sure she will stay on the reservation.

Hey, if you mention the firing of two Florida f.c. investigators - holdovers from the previous gov. who ignored f.c. fraud law firms for *years* - then you have to mention that the GOP gov. defunded the so-called rocket-dockets. No more retired judges helping banks steal homes in hearings that averaged 20 seconds (yep, seconds) in many busy jurisdictions.
Total fail, Ms. Wang, to cheery-pick news from one state to slant the impression that one party is doing more than another on the topic. Major fail.
We in Fla. are proud and delighted that f.c. cases will have options for regular court, with real (elected and accountable) judges who read the paperwork and do not operate without oversight in locked conference rooms. Judges who do not threaten lawyers with sanctions when they speak to reporters about the proceedings. Judges who understand the Florida Sunshine laws, and abide by them.
This topic is too important for dopey partisan sniping, and I am shocked and disappointed about what I see here. The rocket docket made national news, infamy, and its end is way, *way* more important than any two civil servants.
This selective reporting is way below propublica’s typical standard.

This is a little bit off topic, but nevertheless relative to the broader topic.  JPMC recently contacted me in writing and by phone to inform me that my request for an unemployment deferment had been rejected because I failed to provide the required documents.  However, I NEVER requested an unemployment deferment.

Is Chase trying to put together false statistics to show the government that they have complied with the unemployment deferment option when in fact they have not?

Based on past behavior by Chase I can only assume that this is more than a simple mistake.

As they say in their commercials:


Ok, let see what they have to investigate,is the law being followed: foreclosures are rising,mistakes (wrongful foreclosures) have been made, unfair and deceptive business practices are increasing, there is no good faith dealings with consumers,  robo signing has been openly admitted but let’s leave the banks incharge of self assessing themselves, or they may not contribute to my parties election campaigns. 

There will be no criminal prosecutions, it has already been decided.The proposed settlement being brandied about from the state attorney generals offices has taken many of the rules from the website, but it overlooked the most important rule of law, equality.

Every negative equity homeowner is legally entitled to a modification .

If anyone was watching Rupert Murdoch & son before Parliament today testifying in the hacker investigation - they would’ve seen a completely different government standard to get the truth - and much, much more evidence that the USA has degenerated into outright filthy greed, fraud and criminal acts. The British Parliament demonstrates how a government should investigate crimes committed even by powerful billionaires - and how low this country has sunk. The USA government not only outright refuses to prosecute banks involved in massive financial and housing fraud, but sanctions and is complicit in it.

The people of this country - those not mindlessly continuing to pretend nothing is wrong - are in deep, deep trouble. The USA is no longer a democracy - but a dysfunctional, dying country controlled by elected greed-filled, lying scum selling votes & power to the highest bidders, & willing and able to do anything to enrich themselves personally. That is why they say or do anything to get elected & getting elected costs tens of millions of dollars. Capitalism has destroyed this country and its people.

Watching Murdoch squirm & lie under investigation reminded me of what it once felt like to be a U.S. citizen - and not corporate prey.

Will Harper:  President Obama DID attempt to appoint Warren to the Commission; however, the Republicans refused to approve the appointment.  They were afraid she would cause major problems with their “banker buddies.”  I wish he would have fought harder to have her appointed, but going up against the Republicans nowadays is like hitting a brick wall!!

Tutt:  I couldn’t agree with you more.  Our government is become a corporacacy rather than a democracy!  And, if we vote all these idiots out of office, we’ll just get more of the same because you apparently can’t run for an office unless you have some BIG sponsors behind you; i.e., corporations!  The average citizen can’t afford to run for office, and even if they did happen to get in….who can tell that they won’t be blinded by all the money thrown at them by corporations?  It’s a sad tale what our government has turned into.  The average citizen has no standing at all….it doesn’t matter that it’s OUR taxpayer money paying their salaries when they get bigger bribes from corporations!

Didi: It is becoming soooo obvious that we as a people need to stick together & not let “big interests” continue working overtime to divide the nation “Main Street”  (repub vs. dem). Big money plots & uses that diversion to ram more & more restrictions down our throats that clear the way for them to keep lying, cheating & stealing. I’m amazed that so many people just don’t care what’s happening all around them. It’s so obvious!

There are alternatives to foreclosure, loan modifications and short sales.

In case you haven’t heard, lenders are not abiding by the law, and
illegally taking, actually they are stealing people’s homes. 

But now, you can stop them in their tracks by using a legal and lawful
process.  Anyone, yes, including you, can legally stop paying your
mortgage forever, plus own your home free and clear without paying your
lender another cent.

This simple process has already helped 1000s of people just like you save
their homes from foreclosure or owing more money than their home is worth.

And forget loan modifications and short sales, this is 100 times better.

I hnew their was a forclosure in the US but I didnt realise it was firing this much debate.
The banks need to stop being so reeckless during the good times and so heartless in tough times .
It is the hot water cold water scenairo..
What do you think?

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