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Read The Foreclosure Public Policy Fight!

Those on the outside of foreclosure public policy might not be aware of the fight raging in and around public policy circles about the complex issues facing foreclosures, mortgages and consumer policy relating to home ownership.

A brawl broke out when a banking industry hack Chris Whalen whined in a hit piece published on the banker porn website HousingWire,

Regulation of Banks is Bad! Bad! Bad!

The volume on Whalen’s spite and vitriol for those who dared to represent the interests of consumers (how dare they) was turned way, way up.  The problem with Whalen is he has no idea what’s actually happening on the ground with people like you and he entirely ignores all the crimes and the fraud that continue to be perpetrated by banks and their co-conspirators.

Whalen’s post at Housing Wire on the servicing industry represents a new low. It’s rife with errors and misinformation. For instance, Whalen treats the servicers as if they are the same as the lenders. They aren’t; they are agents for the lenders (who are typically securitized investors). Whalen falsely claims that the lenders have incentives to care about maximizing the value of the real estate asset (the mortgaged house, which often winds up being REO, or real estate owned). I challenge Whalen to point to the section of the pooling and servicing agreement that compensates servicers for doing a good job of maximizing the value of the house for investors, either during the foreclosure process or afterwards.

Whalen completely skips over how servicers cheat investors as well as homeowners. And note this isn’t an ideological issue; uber-conservative mortgage investor Bill Frey of Greenwich Capital has worked hard, but will little success, to organize investors to combat servicer abuses. And from what I have seen in investor reports, servicers run ever scam in the book. One uncovered by Lisa Epstein: servicers will tell the trust (investors) that it has sold a property out of REO anywhere from 2 to as many as 8 months after court records say it has been sold. Why the delay? It allows servicers to collect servicing fees to which they are not entitled.



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