Do you remember when Senator Elizabeth Warren questioned the Comptroller regarding the weakness of the National Mortgage Settlement at a Banking, Housing, and Urban Affairs Committee hearing in February? Do you remember the non-committal dodges the Comptroller successively squeaked out in response to all her questions? So does Senator Elizabeth Warren.
Find below the copy of the follow-up letter she sent to Federal Reserve Chairman Ben Bernanke, Attorney General Eric Holder, and SEC Chairman Mary Jo White this morning in regards to that hearing. Find above that slanty action shot that everyone loves using whenever she does this sort of thing.
May 14, 2013
The National Mortgage Settlement, an agreement between the federal government, 49 state attorneys general (the black sheep? Oklahoma.), Bank of America, JPMorgan Chase, Wells Fargo, CitiGroup, and GMAC that aims to compensate tens of thousands of wrongfully-foreclosed homeowners for their financial loss, contains a carve-out that allows the banks to continue turning out the same wrongful foreclosures that created the need for the settlement in the first place.
The settlement, a relatively paltry $25 billion (for reference: Bank of America has $2.3 trillion in assets), contains an acceptable "threshold error rate" for foreclosures. The rates range from 5-10% based on the company. Even worse, these errors are only counted at all if reported by the banks themselves, meaning that the perpetrators have both an acceptable level of illegal activity and complete oversight of the reporting process.
Such "errors" include:
In one case, mechanical engineer Joji Thomas, in a last-ditch bid to save his home, delivered a cashier’s check for $27,777.85 to Bank of America, which promptly lost the payment, and foreclosed anyway. In another case, BofA transferred a property to a separate entity that was already closed down, and they clumsily switched the dates on the document to make it look correct. Reporters also uncovered documents prepared by “robo-signers,” individuals hired to attest to the veracity of thousands of mortgage documents without having any underlying knowledge of the contents (basically a mass perjury scheme).
I only occasionally deal with foreclosures on the debt and consumer protection side of the firm, and I have held in my hands mortgage documents fraudulently and deliberately altered by bank representatives-- so the fact that it happens at this scale is no surprise. If the past is any indication, it is equally unsurprising that both the federal government and every state has been wholly unable to do anything about it. Except Oklahoma, which still has it's pride I guess.
Philadelphia's district court has given bad court fee debts to collectors at such an alarming rate that it had to enjoin all collections.
The First Judicial District of Pennsylvania is in some trouble. Several years ago, the court shopped out its huge backlog of court-fee debt records to twelve different collection agencies and debt collection law firms. The only problem is that these records were produced and maintained by the Clerk of Quarterly Sessions, an elected job so prone to bureaucratic incompetence that in 2010, after leaving $1.5 billion in court fees uncollected since 1971, the city eliminated the position. Needless to say, selling their records to debt collectors proved as troublesome as leaving them uncollected.
The Philly weekly City Paper collected some of the worst stories:
This past January, Andre Hawkes got the first of several unpleasant phone calls. “We have your name here,” the caller said, explaining that he was collecting old debts for the Philadelphia courts. “If this debt isn’t paid, a warrant could be put on you."
These are only some of the thousands and thousands of bad collection cases the court shopped out to collection agencies. And what collection agencies they picked!
Hired in February 2011 was St. Hill & Associates, which later changed its name to Convergent Legal Group LLC. The courts, which told applicants that their “qualifications” would be judged based on their “experience on similar projects,” will not say whether they examined St. Hill’s history. But a simple Internet search would have raised a number of questions.
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