Foreclosure consultant fees under fire

'Independent' consultants charged up to $630 per hour to review loan files for bank errors. But some say they were told not to find any.

By Teresa at MSN Real Estate Jan 21, 2013 1:07PM

At least one member of Congress is seeking an investigation of the consultants who received more than $1 billion in fees in a failed foreclosure-review program that was scrapped this month.

 

No one knows exactly how many loans were reviewed by the consultants at fees of up to $630 per hour. But the process was deemed to be so flawed that it was ended just days after the deadline for homeowners to apply.

 

"It was doomed from the beginning," Sheila Bair, the former chairwoman of the Federal Deposit Insurance Corp., told The Huffington Post. Bair had criticized the plan from the beginning. "It was designed to generate fees for consultants, not to help homeowners."

 

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Stacks of papers (© Win Initiative/Getty Images)The plan was to have “independent” consultants review the cases of homeowners who had been in foreclosure during 2009 and 2010 to determine whether lenders had made mistakes. Homeowners who had suffered wrong could receive payments of up to $125,000. While 3.8 million homeowners were eligible to have their cases reviewed, fewer than 500,000 had applied by the Dec. 31, 2012, deadline. Most of those wasted their time filling out the application.

The new program will not attempt to pinpoint bank wrongdoing. Instead, the banks themselves will spread a total of $3.5 billion among the 3.8 million borrowers whose homes were in foreclosure during that time. Payouts could range from $250 to $125,000. It’s unknown how payments to individual borrowers will be determined.

Rep. Carolyn Maloney, D-N.Y., is asking federal regulars for information on how the consultants were hired and the fees they were paid.

The Times and The Huffington Post both interviewed people involved with the reviews, who cited numerous problems with the process. Plus, the independence of the reviewers was compromised by the fact that they were chosen and overseen by the lenders they were reviewing. The consultants looking at Bank of America loans say they were discouraged from reporting bank errors.

 

"We knew what we were looking at," one employee told The Huff Post. "But we were told under threat of losing our jobs to not report what we saw."

 

The Huffington Post wrote:

But inside observers who shared their experience with The Huffington Post and other regulatory experts familiar with the process said that the decision to scrap the reviews was also a tacit admission that the program, which had cost billions of dollars and one year of intense work, was too broken to save. Had the reviews continued, insiders note, they would have produced results compromised by systemic mistakes and errors made along the way by the contract employees at banks and at the auditors.
 
60Comments
Feb 16, 2013 10:15PM
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THIS ISTHE SAME IDIOT PRESIDENT THAT BAILED OUT THE BANKS AND YOU THINK HE CARES FOR YOU ALL!! HAHAHAHAHAHAHAHA! WAKE THE %$#@ UP!!!
Feb 16, 2013 10:14PM
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Another liberal run program and your wondering why it went wrong!...HMMM don't trust Obama bin laden your a fool if you do.
Feb 16, 2013 9:29PM
Feb 16, 2013 9:28PM
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Judging from all the comments the only way out of this mess is to save money and when you have enough, pay cash.  My mom and dad did this all their life. When they passed they owned three houses outright. Granted, none were mansions but there were no mortgages.   An individual selling an older house in an older neighborhood will be selling at a lower price than a newer house in a 'better' neighborhood posted through a realtor.  Try buying only as much as you can afford outright or rent and let someone owe the banks. I like living in one of the old, payed for houses.  I was thinking about getting a home improvement loan untill I read all these comments but you all have quickly changed my mind.  No loans for me, even if it falls down around my ears.
Feb 16, 2013 7:56PM
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Forget about that phrase too big to fail, the reality is it's too big to jail.

Feb 16, 2013 7:55PM
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CNBC's Maria Bartoli,one may get the impression she is perfect public relations shill for Wall Street who came on the scene in 2001, it would be hard to dispute that.
Feb 16, 2013 9:53AM
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Mortgages are legalized thievery.   That is why mortgages are sold and resold and resold.  The banks make a ton on the idea of the future value of money con.  Foreclosures are the same.  You stay in a house 10 years, pay 80% of the loan, its sold and the process starts over.  In 30 years, the house has paid 3 times the original value and the amount financed is still on the books in full.  What a racket.
Feb 16, 2013 5:58AM
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So banks are STILL stealing from you.  And ya'll are shocked?  Looks like this affects "lower class neighborhoods" per the article.......FREE CLUE ALERT:  DEMOCRAT VOTING HOODS.  

The problem I have is there are some of you that actually believe one party or the other has your best interests at heart. Of course Repubs are no better.  But at least they aren't telling you they are helping you by violating your **** cavity.  No.....Obama supporters are particularly foolish because Dems campaign for the "little guy".   What a crock of.....No major bankster has gone to jail during his term (he runs the Justice Dept., remember).......and no one will as long as he (or another bought-and-paid-for politician is in power. 

YOU deserve what you vote for.  Stop listening to seductive lies. 

You are old enough to know better. Act like it. 
Feb 16, 2013 1:54AM
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I have tried for 4 years now to refinance two loans together to no avail.  I have an 830 credit score, I owe no money at all, have excellent credit history, no late payments but what I do have is a lst mortgage at 6% which I don't feel is too bad; however, in taking out the 2nd loan I was told at that time I could only get the 2nd mortgage at  8.19% it was the only going rate and that after l year I would be able to refinance together for a much lower rate.  Have been trying ever since.  Even filled out paperwork for Nevada's Hardest Hit program, yes they reduced my 1st mortage to 10%  per monh payment, signing I would not sell my house for 3 years and the 2nd had been approved for elimination due to being so far underwater, I signed, and now they have thrown me back to the wolves at Chase again.  I am now in worst shape then the 4 years of trying. The government and Chase are in cohoots together let no one tell you any different.  Beware, because all they say is Chase is the most difficult bank to deal with and they don't want to participate, why then didn't they tell me this to start with, because they are in it together.  I hope I have saved someone from the trouble, yes, even the government is putting you into more trouble.  I cannot get anyone to touch that 2nd mortgage and I believe it is because no one has any paperwork on it, I surely don't because they never could find it after WaMu was bought out by Chase.  It is entirely hopeless at this point.  In August I will have to either just stop paying that 2nd mortgage or maybe go to the wolves called lawyers to see what I can do, don't have a clue anymore.
Feb 16, 2013 1:47AM
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The "American Dream" was just an advertising scheme thought up by banks and home builders back in the 50's or 60's to sell a product that makes them a ton of money.
Feb 16, 2013 1:44AM
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It is a sad world for us working class!!
Feb 16, 2013 1:42AM
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Welcome to the machine!! It can not be stopped!!
Feb 16, 2013 12:49AM
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An investigation for what? To find that these bastards have been stealing our money. And then what? Just like the bank that was found to be filtering money to the terrorist organizations or what ever it was and their surprising punishment.... a fine.   If it were you or me or Joe Shmuckateli off the street we would be doing 25 to life in a maximum security federal prison getting corn holed every night by a large celly. My point is why tell us you are doing an investigation on a governmental bureaucracy in which if there is a finding it's... ale, ale, oxen free... government entity.

Feb 12, 2013 1:38PM
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Bankers hire lobbist to ensure Congress passes laws in favorof the banks and investers on wall street.

Banking laws are written so the deck is stacked.  Working america are pawns to be used to benife the ones who write the rules.  " The Golden Rule"  He who has the gold writes the rules"

Feb 12, 2013 12:45PM
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the big banks need to lick it where they stick it- ****s all of them.
Feb 12, 2013 12:17PM
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I really hate corruption and every penny should be returned,600 an hour WTH...
Feb 12, 2013 12:17PM
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And people voted for a guy who wants to expand the government? Let's cut to the chase. Anybody who voted for Obama is either a left wing ideologue or is a few aces short of a full deck.
Feb 12, 2013 12:00PM
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Who is responsible for the program? Why aren't they in jail for fraud?
Feb 12, 2013 11:54AM
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Citimortgage should be shut down. Horrible mortgage company. Don't do business with these people.

Feb 12, 2013 11:42AM
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We need more government programs to make sure that the government programs that were meant to police the government programs that were meant to oversee the other government programs are not running in a way that is efficient or possibly useful in any way!
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