Friday
Dec302011
Mortgage Complaint? CFPB Is Open For Business
WASHINGTON (MarketWatch) — If you’ve been just dying to find someone to listen to your beef with the company that services your mortgage, now’s your chance. The new federal Consumer Finance Protection Bureau is open for business and ready to accept complaints and inquiries related to home loans.
Dec 30, 2011 at 12:15 PM
Reader Comments (3)
Are you kidding? The Republicans gutted the CFPB when they made sure Elizabeth Warren didn't get the job as Director. They're making sure it stays gutted by refusing to confirm Richard Cordray till they get a bipartisan board to run the agency under the Congressional thumb, with the big banks and the 1% telling Congress what will be, as usual.
Another do nothing for the middle class agency of our do nothing for the middle class Federal Government.
Cantwell to Justice Department: Fully Investigate Fraudulent Foreclosures before Bank Settlement
In letter to DOJ, Cantwell demands full investigation into robo-signing scandal and ‘pump and dump’ mortgage bubble scheme
Thursday, December 15,2011
WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) demanded the Department of Justice fully investigate financial institutions’ fraudulent foreclosure practices, prior to a settlement that absolves them of liability for their actions. Currently, the federal government and the 50 state attorney generals are undertaking settlement negotiations with the nation's biggest banks over alleged foreclosure abuses.
In a letter sent to U.S. Attorney General Eric Holder, Cantwell wrote that homeowners in Washington state, and across the nation, deserve a better settlement on illegal foreclosures. The potential settlement reportedly releases banks from criminal and civil penalties and is worth around $20 billion.
Recently, it was announced that the Treasury Department is investigating whether ten major banks may have illegally foreclosed on about 4,500 active-duty servicemen and women. In light of this case and others like it, Cantwell called today on the Department of Justice to not let large financial institutions evade liability in the settlement proposal.
Through the first six months of 2011, Washington state had the 15th highest foreclosure rate in the country. RealtyTrac reports that the state had 4,450 new foreclosure filings in June and that overall, there were 29,398 foreclosure properties.
“Recently reported settlement proposals will effectively absolve these financial institutions of substantial civil and criminal liability in one of the largest alleged fraud schemes during the financial crisis,” Cantwell wrote in the letter to Attorney General Holder. “Continued reports of wrongful foreclosures, forged documents, and an inability of servicers and banks to prove chain of title…raises the alarming possibility that these defects were endemic to the mortgage servicing industry across the country. The sheer magnitude of the potential fallout…demands that we undertake a full investigation.”
In the letter Cantwell wrote that a $20 billion settlement is not enough for victims of foreclosure fraud or the millions of Americans who face foreclosure.
“The largest financial institutions … pump[ed] up profits and home prices, while dumping any potential losses on homeowners, taxpayers, and investors,” Cantwell wrote. “As a result of the pump-and-dump scheme … an estimated 14 million Americans are underwater, owing $700 billion more on their homes than those homes are worth. A $20 billion settlement is woefully inadequate to compensate the wrongfully evicted or homeowners struggling to stay in their homes.”
Cantwell also raised the concerns that not enough reforms are in place to effectively prevent another crisis and that victims of fraudulent mortgage schemes are not adequately compensated. Cantwell encouraged Holder to require reforms to ensure mortgage servicers don’t abuse the system again. She noted that confidence in the proper transference of notes and mortgages must be restored and clear chains of titles should be available for all mortgages. Until financial institutions can prove they have the legal authority to foreclose, Cantwell asked for the Mortgage Electronic Registration System to be shut down.
“A settlement with mortgage servicers must also require reforms to ensure such abuses do not happen again,” Cantwell wrote. “The goal of servicing mortgages must be accuracy and adherence to the law, not expediency and corner-cutting. Confidence must be restored that proper transference of notes and mortgages was followed and clear chains of titles are available for all mortgages. Until then, the burden of proof must be on financial institutions to prove that they have the legal authority to foreclose. The Mortgage Electronic Registration System should be dissolved and shut down, and the shortcut that allowed banks to avoid hundreds of millions, if not billions, in local fees to local registrars of deeds be closed off.”
The complete text of the letter sent today follows.
December 15, 2011
The Honorable Eric Holder, Jr.
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001
Dear Attorney General Holder:
I write regarding the ongoing settlement talks between state attorneys general, federal fraud regulators, the White House, and large financial institutions over alleged illegal foreclosure and mortgage servicing practices and abuses.
I am concerned that recently reported settlement proposals will effectively absolve these financial institutions of substantial civil and criminal liability in one of the largest alleged fraud schemes during the financial crisis. Specifically, I am concerned that the proposed settlement includes a release from liability that may be far too sweeping, does not adequately compensate victims, does not require enough of banks to reform the system that led to the crisis in the first place, and is being made before all the facts are known and without the backing of a full inquiry into the size and scope of the alleged fraud.
Large financial institutions helped inflate the housing bubble through tranching and securitizing mortgages at a frenetic pace while disregarding mortgage and foreclosure laws. Collecting fees from issuing mortgages then selling to investors securities backed by these mortgages allowed the largest financial institutions to pump up profits and home prices, while dumping any potential losses on homeowners, taxpayers, and investors. When the housing bubble burst taxpayers were forced to bail out the largest financial institutions. It is estimated that the federal government disbursed over $4.7 trillion to financial institutions, and guaranteed an additional $13.87 trillion, during the financial crisis.
Without a thorough investigation, it is impossible to truly estimate just how pervasive the defects in the foreclosure and securitization process are. Continued reports of wrongful foreclosures, forged documents, and an inability of servicers and banks to prove chain of title and the legal right to foreclosure, raises the very alarming possibility that these defects were endemic to the mortgage servicing industry across the country. The sheer magnitude of the potential fallout from these defects demands that we undertake a full investigation to uncover the true scope of wrongdoing before providing blanket immunity to the perpetrators.
I am also concerned that reports of a settlement in the range of $20 billion, as recently reported, may not adequately compensate the victims of the foreclosure crisis. As a result of the pump-and-dump scheme perpetrated by the nation’s largest banks that inflated – and burst – the housing bubble, an estimated 14 million Americans are underwater, owing $700 billion more on their homes than those homes are worth. A $20 billion settlement is woefully inadequate to compensate the wrongfully evicted or homeowners struggling to stay in their homes. Much more should be required of banks to provide meaningful help underwater homeowners and compensate foreclosure fraud victims.
A settlement with mortgage servicers must also require reforms to ensure such abuses do not happen again. The goal of servicing mortgages must be accuracy and adherence to the law, not expediency and corner-cutting. Confidence must be restored that proper transference of notes and mortgages was followed and clear chains of titles are available for all mortgages. Until then, the burden of proof must be on financial institutions to prove that they have the legal authority to foreclose. The Mortgage Electronic Registration System should be dissolved and shut down, and the shortcut that allowed banks to avoid hundreds of millions, if not billions, in local fees to local registrars of deeds be closed off. It is critical that large banks not be allowed to shirk their tax obligations to local governments. A settlement in this case must compensate state and local governments for taxes and fees which were owed but not collected.
The crisis in our housing and financial markets has shaken the confidence of the American people in our financial system and in government. Holding banks accountable for abusive and fraudulent practices, while compensating damaged homeowners, wrongfully evicted, local governments, and defrauded investors is vital to restoring that confidence. I urge you to ensure that any settlement with mortgage servicers over alleged foreclosure abuses does not absolve liability for crimes and wrongdoing that has yet to be fully investigated, and ensures just compensation for victims.
I appreciate your attention to this matter.
Sincerely,
U.S. Senator Maria Cantwell