« Race and the Housing Bubble | Main | Allied Bank revisited? »

What’s Up With “Independent Foreclosure Review”: Boondoggle for Consultants and More Foot-Dragging by Servicers

posted by Jean Braucher

After the robo-signing scandal broke in the fall of 2010, followed by a huge bureaucratic in-fight, a federal interagency review produced the Independent Foreclosure Review Program, announced with great fanfare in April 2011. See here and, here.

The program contemplated that mortgage servicers would have to employ consultants for independent review of their foreclosure and related modification processing errors and then pay compensation to homeowners who suffered financial loss as a result, with awards of up to $125,000.  

So how’s that been going? As of now, the “independent” consultants are racking up bills for hundreds of millions of dollars (by September, a quarter billion to PricewaterhouseCoopers alone), while homeowners—according to American Banker—have so far gotten nothing!

Like every other initiative to address the mortgage crisis, this one has been marred by footdragging and control by financial institutions.  Effective outreach to borrowers has been slow, and the deadline for consumers to submit requests for review, originally set for the end of April 2012, has been extended twice—first to September 30, 2012, and later to the end of this year.

But the problem of delay pales by comparison to problems of waste and even corruption lately coming to light. The news now is that the reviews are resulting in huge compensation to consultants who are not in fact independent. The American Banker quotes “an industry source” for the proposition that the program is “Kafkaesque” in its costly ineffectiveness.  It also reports that the program is likely to result in much more payment to the review consultants than to homeowners, perhaps at a rate of $4 to $1 or maybe even $7 to $1.

PricewaterhouseCoopers apparently has been getting $12,500 per review for each of 20,000 loans for ResCap, the bankrupt GMAC servicer to be acquired by Ocwen.   The hourly rates have ranged from $235 for associates to $630 for partners!

ProPublica has delved deeply into reports that various servicers are actually heavily involved in the reviews by their supposedly independent consultants, focusing on Bank of American and its consultant, Promontory Financial Group.  Here and here.

The FAQs on the program report that payments to homeowners can start in the last quarter of this year (meaning now), but so far there is no word of any payments reaching injured borrowers; furthermore, if they are denied relief, there is no appeal process.  That would  make too much sense.  



The independent foreclosure review process looks ridiculous, but it starts to make sense once one recognizes that it has nothing to do with ensuring that foreclosures are done properly and everything to do with protecting too-big-to-fail banks from real liability for non-compliance. The money spent on the consulting firms is a small part of what the banks have saved from a business model built on an assumption of non-compliance and lack of push-back from borrowers or government.

And the hits just keep coming.

Seriously, anyone that believed this was ever intended to help homeowner victims in any way didn't just drink the Kool-Aid; no, they consumed powder right from the package.

INDEPENDENT - FUNNY! For example, status of 'Wells Fargo's Audit & contract with Intermediary representing its cash deposits? dba Promontory Interfinancial Network Inc 'exchange' CDARS Certificate Deposit Account Registry Services. 'Independent' means contractor whose affilaites, members, licensess, nationwide brokers dealers -secondary market- ride and hide under wings of the NMLS 'Sponsor' as Seller of secondary market products for which cash was converted, pledged, borrowered, assumed, hypothicated, ... Frank Dodd's answer to the unregulated broker/dealers who sell credit applications, and who are paid outside of closign and act as HUD-1a and HUD-1 independent agents whose Originators sell unregulated - special insurance-like insurance products with options (annunities) in the Megas likeness, use the NOTES in name of Consumer which are receipts attached to trust funds not securities. THESE CORRESPONDENTs are under agreements with Goverment Sponsored Enterprises e.g. Federal National Mortgage Association Trust Agreement; licensees of FHA Connect, independent brokers who input 1003 Uniform Application capital funds pass into third party SEC member as Qualified Intermediary, e.g. First American. Wells Fargo Bank NA TRUSTEE dba Norwest Asset Securities Corp, and Wells Fargo & Co/MN dba WFC HOLDINGS CORP protecting its 'cash' through exchange managed by BONY's Promontory & Clearinghouses. The lookuing into the nationwide network of independent brokers-dealers who sell in secondary market unregulated insurance-wholeloans aka annunities - where cash in exchange for credit extended to consumers is deposited into a national association, federal association, federal savings bank, and that cash 'exempt' from tracking by agencies inplace to protect Economy, third element of our national security, allow under International Class 036: Insurnace, Real Estate and Financial Monetary Affairs by 'mark' registered or unregistered in taking possession of property of third partys thorugh deceptive, predatory, egregious acts that are 'trust funds' not 'securities', that are certificates not securities. The cash invested into CDARS through which MEGA's $250K FDIC protection turned into mega-millions


Expand Relationships with CDARS(r) RECIPROCAL(sm) International Class 036: Insurance, Real Estate & Financial Monetary Affairs; CDARS is a great way to attrack customes with multi-million dollar FDIC coverage, ability to earn CD-level interest, and the convenience of working directly with just one bank. Selling CDARS is only one part of the story. CDARS provides banks with opportunity to cross-sell other services. -Expand customer base, suprass deposit gowth projections by more than 6 times in first year; Leverage relationships to gow other deposit products and expand cross-selling in first 6 months of year 5, lauch a single branch piliot expanded into a corporate-wide initiative year 4, Imagine the power of Many PROMONTORY INTERFINANICAL NETWORK LLC 'CD' See Page 30 of 37.

RECIPROCAL DEPOSITS: 12 CFR 327.8 {Title 12 Banks and Banking Chater III, Federal Deposit Insurance Corp Subcharter 8



RECIPROCAL DEPOSITS: 12 CFR 327.8 {Title 12 Banks and Banking Chater III, Federal Deposit Insurance Corp Subcharter 8

Reciprocal Beneficiaries, & Reciprocal Deposits e.g.Lender's Policy (ATI(r)) Claims Paying Ability Old Republic National Title Insurance Company - is this an insurance product or a depository benefit ?

PROMONTORY INTERFINANCIAL NETWORK, LLC, a limited liability company legally organized under laws of Delaware, having an address of 1515 NORTH COURTHOUSE ROAD Arlington, Virginia 22201 United States requests registration of the Trademark/service mark identified above in the United States Patent and Trademark Office on the Principal Register established by the Act of July 5, 1946 (15 U.S.C. Section 1051 et seq.), as amended, for the following:

International Class 036: Banking services; Financial services, namely, assisting financial institutions with the management of customer funds and facilitating the transfer of funds between fund sources and deposit accounts; Financial services, namely, the management of deposit accounts and facilitating the transfer of funds between fund sources and deposit accounts; Financial services, namely, funds transfer and transaction services; Financial services, namely, allocation of funds to and placement of funds in deposit accounts; Financial transaction services, namely, maintaining customer records for financial transactions, custodial and sub-custodial services, and settlement services; FDIC claim processing services

Link to STATUS 'RECIPROCAL' & Documents attached


RECIPROCAL Banks, RECIPROCAL Deposits, RECIPROCAL special insurance produts which are unregulated called 'TRUST DEED INVESTMENTS'


Guaranty" shall not include
(1) endorsements for collection or deposit in the ordinary course of business or
(2) obligations of the Company or any Subsidiary which would constitute Guaranties solely by virtue of the continuing liability of a Person which has sold assets subject to liabilities for the liabilities which were assumed by the Person acquiring the assets, unless such liability is required to be carried on the consolidated balance sheet of the Company. The
amount of any Guaranty and the amount of Indebtedness or of Investment resulting from such Guaranty shall be the maximum amount of the guarantor’s potential obligation in respect of such Guaranty

Peiss-On-It !!! I'm Drinkin' BEER ! Anybody that had a thought of HOPE for Homeowners was taken-in as I was. Thank GOD I was only taken-in a little. The Kentucky General's Office sent me notice of what my settlement COULD BE WORTH !!! A Very LARGE check for $$850.$$ Notice the
" COULD BE " !
" More BEER said Sargent Dougie " !

shame people lost their homes,ruined their credit

It is not funny. It's another disaster against homeowners who got screwed.

It's a brand new type of fraud. I wonder if there is still time to go to law school?

This settlement is separate from the Attorneys General settlements. To be eligible for the AG settlement, one's home needs to have actually been foreclosed upon. To be eligible for this settlement, the IFR, one merely had to be in some stage of the foreclosure process. That said, please let us know if anyone gets a check.

I just got off the phone with the IFR person for Team Aurora, FSB. As of this correspondence, no checks have been paid for financial hardship due to a 2009 - 2010 foreclosures.

If the lenders "voluntarily" have "independent" reviews and find that money is owned a home owner, do we really think they would voluntarily return it? That would (1) mean they are admitting they were wrong and (2) they are a bank, they never give money away for "free."

I am just glad that the rate of foreclosures is dropping in cities like Dallas, Texas for example. As the economy improves, less home owners will fall for fraudulent foreclosures. Dallas Infographic: http://www.bankforeclosuressale.com/wp/article-01074151.html

The comments to this entry are closed.


Current Guests

Follow Us On Twitter

Like Us on Facebook

  • Like Us on Facebook

    By "Liking" us on Facebook, you will receive excerpts of our posts in your Facebook news feed. (If you change your mind, you can undo it later.) Note that this is different than "Liking" our Facebook page, although a "Like" in either place will get you Credit Slips post on your Facebook news feed.



  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless ([email protected]) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.