Inside Financial Services


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Joseph Nocera, who vehemently doesn’t approve of the OCC’s settlement with the big banks regarding their mortgage servicing and foreclosure practices, and who thinks the state AGs should have been in on the deal so they could make the banks pay, engages in a little snark:

The proposed terms call on servicers to have a single point of contact for homeowners with troubled mortgages. They would have to stop the odious practice of secretly beginning foreclosure proceedings while supposedly working on a mortgage modification. They would have to hire consultants to do spot-checks to see if people were foreclosed on improperly. (Gee, I wonder how that’s going to turn out?) [Emph. added]

Gee! . . . Wait, hold on: no one is accusing the banks of “foreclosing on people improperly”-if by “foreclosing on improperly” you mean evicting people who are current on their mortgages. The banks didn’t do that. No one says otherwise. All the banks did instead was screw up the paperwork on the foreclosure of borrowers who were legitimately in default. A big difference! In the former case, the borrowers would have endured real harm: their lives would have been upended, their credit ratings and reputations ruined, and their finances possibly shredded. In the latter case-pfeh! Not to sound too hard-hearted on the issue, but those people got what they deserved, and the paperwork snafus are mainly a sideshow. So why should the banks pay out $20 billion in penalties? And, especially, why should those delinquent borrowers deserve a principal reduction? That would be a temptation to moral hazard on a grand scale, and could turn a notable paperwork problem into a potential calamity for the banks. Even Joe Nocera presumably wouldn’t want that. He should save the hyperventilating for other issues. . . . .


  1. No Banker Left Behind

    No Matt, it’s not a sideshow, it’s the rule of law, the bedrock of our whole system. Yes, the borrowers are in default and should be foreclosed on. But not through the use of fraudulent documents turned out in foreclosure paperwork mills. In our system even the criminal has rights and must be detained and prosecuted in a manner that preserves those rights. If the police don’t go through the correct procedures or fabricate evidence they risk, if caught, watching that individual go free. And, rather than being snarky, Mr. Nocera is correctly noting the conflict of interest inherent that would exist in a relationship between the banks and the consultants they would hire to oversee their practices. Gee, do you think that company might feel some pressure to score the bank well on it’s foreclosure protocols? How did that kind of relationship work between the banks and the credit agencies right before it all blew up in 2007. I continue to marvel at the writings that appear on this site castigating everyone and everybody for what has transpired except for the banks themselves. Matt, when you get off your knees taking care of Mr. Banker, take a look around——–in this country fraud is a criminal activity. Call it for what it is.

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