So says Roosevelt Institute fellow Matt Stoller in the below interview. Stoller is talking about the 50 state mortgage fraud settlement and frankly he's right. It's beyond belief the government has literally shoved under the rug banks improperly seizing and foreclosing on properties owned by Americans. Former TARP inspector general Neil Barofsky also points out some outrageous mortgage settlement facts in the below Bloomberg Law interview.
It's even worse than just the settlement. Two days ago the HUD Inspector General released reports proving banks committed robo-signing and even impeded investigations. The report on Wells Fargo shows the abuse was wide-spread and ongoing. Bottom line, the underlying behavior by the banks goes unimpeded:
The release by San Francisco county assessor-recorder Phil Ting of a study of document irregularities in foreclosures has put a spotlight on the failure of Federal banking regulators and state officials to do anything beyond cursory examinations of servicers’ bad practices. If a country official with limited resources can show that there are widespread abuses, what is the excuse of state and Federal officials for their failure to understand the depth and severity of these problems?
Wells Fargo was literally fraudulently foreclosing on people when they were under investigative review by HUD, between October 1, 2008, and September 30, 2010.
At the time of our review, affidavits continued to be processed by these same signers, who may not have been qualified, and these signers may not have adequately verified certain figures because they accessed a computer screen of data showing a compilation of figures instead of verifying the data against the information through review of the books and records kept in the regular course of business by the institution.
Another report shows the large banks impeded an investigation into the systemic and widespread robo-signing and foreclosure document fraud committed:
Top banks impeded a federal inquiry into their foreclosure processes, according to a report released Tuesday, dragging their feet on turning over documents and blocking investigators' attempts to interview bank employees.
The inquiry led to the wide-ranging $25 billion mortgage settlement with the five largest mortgage servicers that was announced last month and filed in federal court on Monday.
But the banks hampered an early investigation into whether they were pursuing unlawful foreclosures through shoddy paperwork and lax controls, the inspector general's office at the U.S. Department of Housing and Urban Development said in its report.
Bank of America (BAC.N), for example, provided only excerpts of files, incomplete documents, and conflicting information to government investigators, and refused to provide some of its foreclosure policies.
It also limited employee interviews, and refused to let employees answer certain questions, the report said.
In the Bank of America investigation, the HUD watchdog said it had to enlist the Justice Department's help to issued civil subpoenas in order to secure documents and obtain testimony.
There appears to be one silver lining to this justice denied deal where some are getting paid.
The banks are paying $95 million, for example, to settle a case brought by Lynn Szymoniak, a homeowner who was featured on CBS’ “60 Minutes” last year for uncovering details about banks’ so-called robo-signing of foreclosure documents. Szymoniak will get $18 million from the settlement.
On the other hand, HUD is literally trying to disprove claims made by MBS investors that they will ultimately pay for the bail out.
Realty Trak's latest foreclosure data tells us while foreclosures were down in February, a tsunami of seizures is coming.
Foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 206,900 U.S. properties in February. That was a 2 percent decrease from the previous month and was down 8 percent from February 2011 — the lowest annual decrease since October 2010. The report also shows one in every 637 U.S. housing units with a foreclosure filing during the month.
“February’s numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed,” said Brandon Moore, CEO of RealtyTrac. “Although national foreclosure activity was pushed lower by decreases in a handful of larger states, 21 states posted annual increases in foreclosure activity, the most states with annual increases since November 2010.
“The foreclosure and mortgage settlement filed in court earlier this week will help pave the way to a properly functioning foreclosure process by providing a clear roadmap for necessary foreclosures,” Moore continued. “That should result in more states posting annual increases in the coming months. Not surprisingly, many of the biggest annual increases in February were in states with the more bureaucratic judicial foreclosure process, which resulted in a larger backlog of foreclosures built up over the last 18 months in those states.”
With all of this going on the OCC is investigating robo-signing with credit card collections:
JPMorgan Chase & Co. took procedural shortcuts and used faulty account records in suing tens of thousands of delinquent credit card borrowers for at least two years, current and former employees say.
The process flaws sparked a regulatory probe by the Office of the Comptroller of the Currency and forced the bank to stop suing delinquent borrowers altogether last year.
The bank's errors could call into question the legitimacy of billions of dollars in outstanding claims against debtors and of legal judgments Chase has already won, current and former Chase employees say.
Nice work if you can get it. As Barofsky points out, the allowed 1% fraudulent foreclosures with a get out of
jail fine free card is one hell of a chunk of change. There are approximately 55 million mortgages in the United States. Taking 1% of the 203,458 January foreclosure starts and then using the RealtyTrac's average sales price of a foreclosed home being $165,321. That's roughly $336 million of free money to be had, in just one month by illegally foreclosing on someone's property and then selling it.
In the words of Pimco bond fund manager Simon:
“Think about this, you tell your kid, ‘You did something bad, I’m going to fine you $10, but if you can steal $22 from your mom, you can pay me with that.’”