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.
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."
Post continues below
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.
Forget about that phrase too big to fail, the reality is it's too big to jail.
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.
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"
Citimortgage should be shut down. Horrible mortgage company. Don't do business with these people.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.