Thursday, January 8, 2015

▶ Elizabeth Warren On Illegal Foreclosures. INCREDIBLE VIDEO - YouTube

Sen. Elizabeth Warren, a Massachusetts Democrat and longtime consumer
advocate who is quickly developing a reputation as perhaps the Senate's
most effective cross-examiner. Following a series of probing questions
that would not have been out of place in a court room, Warren excoriated
the regulators for not immediately turning over case records of
borrowers who may be considering private legal action against their

"You have made a decision to protect the banks but not to
help the families who were illegally foreclosed on," Warren said.
"Families get pennies on the dollar for being the victims of illegal

She continued: "You know of cases where the banks
broke the laws, but you are not going to tell the homeowners. People
want to know that their regulators are watching out for the American
public, not the banks. Without transparency, [we] cannot have any
confidence in your oversight or that markets are functioning correctly."

the past few months Warren and other legislators have repeatedly asked
bank regulators at the Office of the Comptroller of the Currency and the
Federal Reserve for more information about the case-by-case review of
homeowner loans that was dropped in January in favor of a blanket $9.3
billion settlement.

At the hearing before the Senate Banking
Committee, Warren and Sen. Sherrod Brown (D-Ohio) made clear that they
were not happy with the answers lawmakers have received thus far about
the program, which is widely considered an expensive and lengthy

Last week, the Government Accountability Office issued a
scathing report of the reviews, finding that regulators did not provide
proper oversight and that some errors likely went undetected. On
Tuesday, regulators released new information suggesting that banks may
have made errors in as many as 30 percent of all loans that qualified
for a review, a figure far higher than previously reported.

hearing was framed by the Senate committee as an opportunity to
understand better the relationship between the financial institutions
that agreed to the loan reviews nearly two years ago, and the
independent consultants -- companies like Promontory Financial and
Deloitte -- hired by the banks to conduct the reviews. As HuffPost and
others have reported, those reviews were compromised by inconsistent
oversight of the often-poorly trained contract employees and by
improperly close relationships with the banks themselves.

questioning from Sen. Jack Reed, a Rhode Island Democrat, regulators
came the closest to acknowledging that the reviews, which resulted more
than $2 billion in payments by the banks to consultants, were poorly
conceived and supervised.

"The OCC and the Fed greatly
underestimated the complexity of the task," said Daniel Stipano, a top
lawyer at the OCC. He cited the number of financial institutions,
consultants and homeowners involved and the difficulty in negotiating
state law as among the challenges that reviewers and regulators had to

Asked if he thought the structure of the reviews was appropriate in hindsight, Stipano responded "no."

would take a different approach" if the process were done again, he
said. He declined to say what changes regulators might make in the

Brown led off the committee by asking officials to reveal
the name of an independent consultant that regulators had admonished
for shoddy work. The officials declined, citing the confidential
bank-regulator relationship. They did not rule out the possibility of
disclosing the name of the consultant in the future.

Brown seemed
to find this response unsatisfactory. "How does disclosing the identity
of an underperforming third-party entity damage the relationship with
banks?" he asked.

Warren focused many of her questions on the
January settlement into which most of the banks conducting the
foreclosure reviews entered. That deal requires they distribute $3.6
billion in cash payments to 4.4 million homeowners who received a
foreclosure notice in 2009 or 2010 -- a number far greater than the
half-million or so who applied for a foreclosure review with a specific
complaint. Most borrowers will receive less than $1,000 each.

noted that regulators have given conflicting answers as to the number
of loans that reviewers found to contain bank errors. Regulators have
said roughly 100,000 reviews were completed, or nearly so, when the
program ended. The Federal Reserve, for example, initially said that
errors were detected in 6.5 percent of those loans, but subsequent
estimates have put the percentage both higher and lower than that
figure, Warren said.

▶ Elizabeth Warren On Illegal Foreclosures. INCREDIBLE VIDEO - YouTube

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