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 12, 2013 11:23AM
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well, here is another story to add to the list of "unbelievable". We had filed bankruptcy on over $60,000 in medical bills. Our home was NOT included in this. I came home one day to find a man walking around our home. When i asked what he was doing, he said the attorney for Chase Manhattan ( our mortgage company) had told him the house would be for sell. I said it was a mistake, it wasn't for sell. with in weeks we had a letter from the attorney in Philadelphia saying Chase was foreclosing on our house. We were current with our payments, but they said we weren't paying the full payment. Each month we received a statement from Chase detailing our payment. How much it was, what went to insurance, taxes, and principal. It also said what was due and when the payment was due. they wouldn' t explain the difference in what they said we were supposed to be pay and the stated  amount . Then they stopped cashing our payments. I spoke to a rep from Chase and was told to send the payments by Western Union. by now we are 3 months in arrears. so they can foreclose. then the court said we had 30 days to bring the payments up to date. Since they never returned our money orders we had to come up with the extra payments plus the difference in what they said we owed. We gave part to our attorney and had a family member mail a money order to the attorneys for Chase for the remainder of what they asked for.  in court they claimed they never received it (it was returned 2 weeks later) and asked for the foreclosure to be granted. We lost our house, they had it resold within 2 months . We had invested $50,00 in improvements paid for it for 4 years and they sold it for $48000 more than we paid for it. Also it had a rental unit, Chase's attorneys told the tenants to stop paying rent before the foreclosure. This cost us over $1500, and since they were made about moving they trashed the place and it cost us $1800 to clean and repair.  we filed the paperwork for the settlement. Now we worry that will disappear also.
Feb 12, 2013 11:22AM
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Bank of America did everything in their power to get us to give up when we tried to modify our home loan.  It took months and they eventually cut our payment almost in half, but we went from owing for 12 years, to owing for 49 years.  It's a mess and the government doesn't  give 2 farts in the wind about any of us who struggle.  They rarely returned our calls, lost our paperwork gave us short deadlines, changed our contact with them  without telling us.  then the contact said that because we were in the process of modifiication she wasn't allowed to talk to us.  All a load of useless crap. I was told that the government paid the banks to offer help to homeowners...they should have paid them for the homeowners they helped, then they would have been more of an actual help to homeowners
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This is OUR government hard at work - stealing from it's citizens.  Sickening!
Feb 12, 2013 11:14AM
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I went through program twice.  What a JOKE.  CHASE was my lender.  They are #1 in screwing up modifications. They can't find paperwork and you get to send them more to lose 
Feb 12, 2013 11:14AM
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The banks and mortgage companies have no interest in helping anyone but themselves!  If the US had done what Iceland did, we wouldn't have this mess still ongoing!  It's time for some heads to roll, and these banks to suffer the consequences of their greed.

Feb 12, 2013 11:13AM
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So...which one of our super smart politicians determined that “independent” consultants were to be on the bank's payroll?? My 12 year old son caught this, but our "too-smart-for-the-rest-of-us" politicians missed it?? 

And now, after millions of home owners wasted their time and money, just to be swindled by bank hired impostors, what justice do they have? None. They simply waited until they got caught, said "My bad", scraped the old program, and then replaced it with one where they DON'T look for bank errors, but instead just sprinkle some money over all the mortgages.......'Pay no attention to the man behind the curtain'.
Feb 12, 2013 10:54AM
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Let me make this VERY CLEAR  there were NO MODIFICATIONS EVER! that was a "legally allowed mechanism" for the rich Banks to get a BONUS from the feds, in the name of helping the home owners!. Freddie Mac and Fannie May NEVER forgave any of the principal balance and modified a single loan, instead they created payment plans for home owners under water in the name of  "modifications" and made it even worse for them to stay in their home!!   

 

I can share my OWN experience, there are Millions of other helpless home owners either under foreclosure or on the street.  When my house became defaulted, they added thousands of dollars in high interest, thousands and thousands of attorney's fees, and late charges, making the loan impossible to afford!!!. Bank added a whopping $ 100,000 back into the loan and increased the payment two fold still calling it a "modification"  just in time to avoid investigation y the FHA for not modifying the loan on time, and still collected "bonus money" right before the 2012 elections!!!! 

 

Wells Fargo Home Mortgage is right at the TOP of the list of culprits, they do it so professionally and legally with no respect for human race.  The only persons benefitting are the thriving attorney's and the Bank it self, at the cost of eating up equity collected over years !!!!!.  Anyone else? 

 

 

 

 

Feb 12, 2013 10:40AM
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Just another way the bank is screwing people.  They never wanted the house. They wanted to threaten you out of the home or get every last dime.  Then Then they have the nerve to say oh it is not worth us to bother with you can have it.  With all the back taxes, back fees due.  The house has been tore up after they moved from threats.  Now your screwed by them one more time.  What the hell.  You can say your going to then not do it?  Threats need to stop. Either you want it or don't. Lower the price and 80 percent of the people would stay.  What ever ............
Feb 12, 2013 10:31AM
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This was wrong from the beginning.  Had the government really wanted to help homeowners they would have given the mortgage holders $100,000. for each mortgage not just given them whatever they felt like. The homeowner would have been helped and the economy would be in great  shape.  We have people who have lost their homes and many empty homes  that are in bad shape waiting for an investor to snatch it then flip it and rent it to some poor soul for way more than it is worth.   

 

Feb 12, 2013 10:25AM
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ok my home was foreclosed on in 2009, my mortgage company who was GRP Financial would'nt even help me modify or refi they literally said we aren't in the business to do that, you have to find a 3rd party to help you!!  But they said they would accept my payments I asked where will you be applying my payments to they said to our attorney's. I kept all their emails from Adam De Senso who was the officer under my loan,  just incase I need them later to build a case against them. I lived at my home for10 years bought with anyones help. GRP bought my loan thru OPTION ONE you all know that mortgage company that went belly up they were a part of HR Block the tax consultants?
Feb 12, 2013 10:25AM
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Government, money, not knowing how it works or how it is spent, gotta pass it so we know what's in it.  Tax the rich, that will help.  No one is for the middle class as we are the only one's that provide the necessary funds for these crooks to keep on doing what they do.
Feb 12, 2013 10:23AM
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GREED,GREED,GREED  even when buying a car

Feb 12, 2013 10:15AM
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hm.... its a little more than 3.8 million.  that is not believeable.
Feb 12, 2013 10:08AM
Feb 12, 2013 9:52AM
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Who are we to believe............you would think somebody in our government has their hands on the steering wheel and eyes on the road for the "home owners"...........is there not anyone looking out for the home owners?  Everytime I read something about houses, foreclosurers, loans it is all about the banks making money or either the government has sued big banks and all the while the home owners are still out of their equity.  Is this ever going to get resolved.  What happen to all the talk during the election, you know how they were going to help with the housing, work towards getting people back to work, well here we are...........just waiting on our re elected leadership to start doing something.
Feb 12, 2013 9:51AM
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This is what has happened to banking since its deregulation back in the 80's.   Thank you Teflon Ron and both Democrats and Republicans that voted for this to happen.
Feb 12, 2013 9:42AM
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Thankfully I have a wonderful attorney handling my foreclosure. I received the review packet and immediately called her about this. In her words I was told "Do Not fill it out, that I could lose many of my arguments depending on their findings." This was just another HUGE scam by the banks to screw all the people who needed or still need help against this still unregulated institution!

Feb 12, 2013 9:14AM
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ahhh  another   consultant(s)  screwing  people...... this  is   a  huge  scam  that  has  been  going  on  for  generations.....

 

be   a  consultant  to  some  governement entitty   and  screw  the  taxpayer.

Feb 12, 2013 9:14AM
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We should throw more taxpayer money at them, that will solve the problem. Give them the Social Security checkbook. I know in my heart they would never do anything to lose that money.
Feb 12, 2013 8:55AM
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Hey gun nuts- here is the threat to your freedoms, not some military  clamp down.    After all, what is it that you fear from the government-  the loss of your home and the freedom to live in it?   Take a close look, peoples homes and freedoms are being stolen not at the point of a gun, but by the slick bankers and wall street scam artists who pay off your elected officials.  All the AR 15's in the world are no good against these guys.
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