Saturday, January 26, 2013

Another bank victory

"The $8.5 billion foreclosure abuse settlement reached earlier this month with the mortgage industry was designed, bank regulators said, to speed quick relief to millions of homeowners. So far, however, it is the mortgage industry that successfully pushed for the deal that is likely feeling the most relieved.

Under the deal, struck with regulators at the Office of the Comptroller of the Currency and the Federal Reserve, 11 mortgage companies are responsible for $3.5 billion in direct payments to homeowners who received a foreclosure notice at the height of the housing crisis. The companies also owe another $5 billion in aid to current homeowners.

The settlement replaces a case-by-case loan review program known as the Independent Foreclosure Review. That program was intended to give homeowners who received a foreclosure notice at the height of the crisis the opportunity to have an independent consultant crack open their loan file to determine whether their mortgage company had made a mistake during the process, as many claimed. But as the reviews dragged on, questions mounted about whether the reviews were truly independent from bank influence, and the cost of the reviews began to spiral out of control"

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