The Foreclosure Review Fiasco- A Bizarre Charade…..Staggering Interview of All That Went Wrong….

LISTEN TO THE INTERVIEW HERE

On the broadcast a week or two ago we had a clip of Elizabeth Warren, from the first set of hearings on the Independent Foreclosure Review, browbeating the representative of the Office of the Comptroller of the Currency and the Federal Reserve about their apparent inability or unwillingness to release any of the information they gathered in this review to the public or to possible homeowners filing suit, which was a good little browbeating. But let’s get the larger picture. What was the Independent Foreclosure Review? Who started it and why?
YVES SMITH:   Okay. It was officially entered into in April of 2011, and even the back story sort of explains why it came out ““ well, a part at least of why it came out the way it came out, which is that in, if you recall, in the fall of 2010 the robosigning scandal became national news. Now that, if you’d been following the story in local courtrooms, there had actually been a lot of foreclosure defense attorneys trying to mount defenses based on the fact that the mortgage securitizations actually had not been done correctly, and you know separately the borrowers would be trying to get modifications from their bank ““ they’d think that they were good candidates for modifications, and historically if a borrower got in trouble you’d always be better off settling for half a loaf rather than none. But instead, foreclosure attorneys starting increasingly looking at whether the party that showed up at the court was actually the right party to be foreclosing. Then you had the robosigning scandal break. Then you had a big scramble among federal regulators, frankly to try to pretend this was not a problem. You had a big review by 11 regulators that implausibly claimed there were no problems in November, December 2010. Nevertheless a bunch of state attorney generals started getting troubled by this and formed a group that started negotiating with the banks around this issue. A number of federal regulators joined, and again it all goes back to Elizabeth Warren.