GAO Study Finds OCC Foreclosure Review too Hard for Us to Understand
Apparently, the Government Accountability Office (âGAOâ) has been studying the possible reasons why so few victims of foreclosure in 2009 and 2010 chose to submit their cases for review by the Office of the Comptroller of the Currency (âOCCâ) as part of the regulatorâs Independent Foreclosure Review process.
The GAOâs report, released earlier this month concluded that the OCC simply made submitting a complaint too difficult for us to understand.Â We couldnât figure it out.Â Â It was over our collective heads.Â And so, completely befuddled by the instructions, we didnât participate in their Independent Foreclosure Review process. Don’t you hate it when that happens?
According to the Alan Zibel of the Wall Street JournalâŚ
An outreach letter sent to consumers, a website and a form needed to request a review were “written above the average reading level of the U.S. population, indicating that they may be too complex to be widely understood,” the GAO found. Without those details, “borrowers may not be motivated to participate,” the report said.
Now, I know that I are just a dumb blogger, but it seemed to me that all of them homeowners that I talk on about the OCCâs Independent Foreclosure Review seemed to understand the letter they received, they all were able to find the Website, and I don’t recall hearing from anyone overcome by the complexity of the form itself.
So, I decided to make some calls to a few of my readers to see if I had missed something. Â The first person I reached was Warren Peace of Paris, Texas. Â And so I asked himâŚ
âSo, WarrenâŚ did you receive a letter some months ago from the OCC inviting you to submit your case to the agencies Independent Foreclosure Review process?â
âA letterâŚ from the OCCâŚ inviting you to submit the facts of your foreclosure to their review process?Â Did you get one?â
âNo, not TuesdayâŚ earlier this yearâŚ or late last yearâŚ a letter would have come addressed to you telling you that you could submit the facts about your foreclosure to the OCCâs Independent Foreclosure ReviewâŚ and that you could receive money if your facts dictated that you should.â
âIn my mail?â
âRight, WarrenâŚ it would have come in your mail.Â From the OCCâŚ like something from a government agency.â
âNo, not Tuesday WarrenâŚ it has nothing to do with Tuesday.Â It would have come late last year.Â About your house that was lost to foreclosure.Â A letter.â
âIn my mail?â
âYes, WarrenâŚ Iâm wondering about a letter you should have received in your mail.â
âOkay, thanks Warren.Â Iâll call you again soon, okay?Â You take care.Â Bye-bye.â
âYes, that’s very funny WarrenâŚ Iâve gottaâ goâŚâ
âIâll go check my mail now.Â If I see the letter from the CCCC, Iâll be in foreclosure.â
âOkay WarrenâŚ bye now.â
Well, on the other hand, maybe the GAO was right, I thought to myself.Â But one call couldnât be considered conclusive, so I dialed again.Â This time it was Bonnie Ann Clyde, from Barrow Bay, Georgia who answered the phone.
âHi, Bonnie.Â How are you?â
âMandelmans!Â Why is you callinâ me?Â I must be lucky.â
âBonnie, you are luckyâŚ do you remember the OCC Independent Foreclosure Review process announced last year?â
âShoot yeah.Â âCourse I do.Â Who would forget that?Â I read your testicles every day.â
âUmâŚ you mean my articles.â
âNo, I was just saying, you saidâŚ never mind.Â So, do you remember the letter the OCC sent out to invite you to submit a complaint about your foreclosure for the review process?â
âYeah, I remember itâŚ do you want me to find it now?Â Hold onâŚâ
âNo, wait… BonnieâŚ BonnieâŚ no, you donât have to go findâŚ Bonnie!Â Oh no. Â She’s gone isn’t she? Â YoohooâŚ Bonnie!Â This is truly unbelievable.Â BONNIE!Â Oh, this is too muchâŚ bye Bonnie.â
So, admittedly it wasnât going well.Â But I wasnât about to give upâŚ third timeâs a charm, right?Â So, I dialed once moreâŚ this time was destined to be betterâŚ how could it be worse?Â And then the phone answeredâŚ
âOh, hiâŚ are your mommy or daddy home?â
âDo you know when theyâll be home?â
âAre you home all alone?â
âHow old are you?â
âSeven and three-quarters.â
âAnd youâre home all by yourself?â
âYes.Â Are you a child predator?â
âOh my GodâŚ no Iâm not a child predator.Â Why would you say that?â
âI donât know, you just sounded like you might be one.â
âHow do you know what a child predator sounds like?â
âI watch Chris Hansen on Dateline.â
âOh my God, and your parents let you watch that show?â
âSureâŚ all the time.Â In fact, Iâm recording you right now.Â YOUâRE BUSTED DUDE.â
âNo, Iâm not. Â I’m not even calling to talk to you, I want to talk to your parents.â
âDo you want to spank me?â
âWhat? Â No, I donât want to spank you. Â What are you…?â
âDo you want to cuddle with me?â
âOh my God, Iâm hanging up nowâŚ youâre a sick little kid, you know that?â
âDo you want to touch myâŚ. CLICK.â
Okay, so maybe this calling around idea wasnât the best one Iâve ever had.
My point was that the OCCâs letter, Website, and form couldnât have been so terribly complicated that it prevented people from submitting their complaints to the review process.Â There had to be other factors that led to submissions being so low.
So, I found a copy of the OCCâs submission form.Â Now we would see just how hard it was to deal with that darn form.Â Okay, here we goâŚ
1. Was this property your primary residence?Â Â Â Â YES
2. Were you under bankruptcy protection or waiting for the final ruling on your bankruptcy case when the foreclosure action happened?
(HmmmâŚ maybe Iâll come back to that one.)
3. Do you believe that the mortgage balance amount at the time of the foreclosure action was more than the amount you actually owed on the mortgage?
HOW WOULD I KNOW?
4. Do you believe that the foreclosure action was pursued because your mortgage payments were inaccurately processed or applied?Â Â Â Â Â Â POSSIBLY
5. Do you believe you were protected by an insurance policy issued by the servicer or affiliate that would have made your payment in the event of unemployment, disability, or illness, but did not do so?Â Â Â Â Â Â ASK MY SERVICER
6. Did you attempt through the court to have the decision to foreclose on your home reversed?Â Â SORT OF
7. Do you believe you provided all the necessary documents required to obtain payment assistance or a mortgage modification before the foreclosure action occurred? Â NOT SURE
8. Was a deficiency judgment obtained against you for an amount that included money that you should not have been required to pay?Â ASK MY SERVICER
9. Do you believe you were making on-time monthly payments in the required dollar amount on your mortgage or an approved loan modification, trial modification, or payment plan, yet the foreclosure action still occurred?
YES & NO
10. Do you believe that you were denied a modification when you qualified under the applicable program rules?Â Â WASNâT TOLD HOW TO QUALIFY MYSELF
How am I doing so far?Â Not so good, right?Â Okay, so maybe this isnât working out the way Iâd thought it would.Â Itâs all just so confusing and above my reading level.Â I think I better sign up for some reading lessons and revisit this whole thing in a few months after I get through the fifth grade.
Then last monthâŚ a new desperationâŚ I mean, developmentâŚ
So, last month, with response rates lower than most timeshare mailings, the OCC brought in the pros from Madison Ave. to help them âsell the product,â as it were, and next thing we all knew, the OCCâs Independent Foreclosure Review was transformed into an ad campaign indistinguishable from the campaign used by the state lottery.
Iâm paraphrasing here, but if memory serves it was something to the effect ofâŚ
âFeeling defrauded?Â Are you living in your parentâs basement at 52 years old? Robbed of everything in your life?Â Considering a drug overdose for the holidays?Â Well, if any of those thoughts have continued to cross your mind since 2009 or 2010, then you could be eligible to receive $125,000 from your bank!
Thatâs rightâŚ and donât worry, because your bank will in turn be getting the money from American taxpayers just like you!Â And all you have to do to win, is go online and fill out a form telling us just how badly your were defrauded back in 2009 or 2010 and weâll take it from there.
And rememberâŚ you donât need a lawyer.Â So, whatever you doâŚ donât hire one.Â In fact, donât even talk to one about this even if youâre related to one.Â Lawyers cannot help you in any wayâŚ so, why waitâŚ apply today.Â
The jackpot is now $125,000 and you canât win if you donât play the Fraudclosuregate game!â
I canât remember exactly, but there may also have been mention of some lovely parting gifts as well.Â I think some contestants were going to receive Rice-a-Roni, The San Francisco TreatâŚ along with Lee Press-On NailsâŚ For those long luxurious nails that last and last.Â
So, getting back to the GAO studyâs conclusionsâŚ the reason I donât think it was the complicated nature of the letter, Website and form is that I think for $125,000, the remedial readers who were defrauded out of their homes would have turned to family members with more advanced reading comprehension skills for help.
However, the GAOâs conclusions are somewhat interesting, as the WSJ explained that they, âechoed concerns raised over the past year by several Democratic lawmakers on Capitol Hill.âÂ And anytime you have the GAO and lawmakers on Capitol Hill reaching the same conclusion, I think you cannot ignore the possibility that they are right.
So, if the homeowners weâre talking about here were in fact reading at such a rudimentary level that they were unable to understand the OCCâs letter, Website and form, it would seem to me that they could not possibly have understood the loan documents they signed that put them in this mess in the first place.Â In which case, what we have here is an entirely new ball of predatory shithead, wouldnât you say?
So, which is it?Â Did they know what they were signing and therefore borrowed irresponsibly and deserved to lose their homes?Â Or, were they unable to read at a level that would have allowed them to understand what it was they were signing?Â Did they gamble and lose, or were they raped for fun and profit?
Honestly, itâs all very confusing.
What shouldnât be confusing in the least, however, is why so few homeowners chose to participate in the OCCâs Independent Foreclosure Review process.Â That, my unenlightened friends at the GAO, is as they sayâŚ a no-brainer.
For the most part, homeowners chose to ignore the OCCâs so-called Independent Foreclosure Review because it was understood to be more of the same clandestine behavior from the most ineffective regulatory agency since the Klu Klux Klan was said to be protecting people.Â What Moodyâs was to ratings agencies, the OCC is to bank regulators.
Lucky for me, I covered the OCCâs announcement of its Independent Foreclosure Reviews at the time.Â The title of my May 21, 2011 article was, and with good reason, âWhen Auditing Foreclosures, the OCCâs Definition of the Word âThoroughâ is ApparentlyâŚ âHidden.â
Let me refresh your memory as to why I said what I did, in outline formâŚ
- The Consent Orders issued by federal banking regulators a few weeks back said that the countryâs largest bank-servicers had to conduct âa thorough independent reviewâ of their foreclosures.
- The findings of the independent reviews will beâŚ sealedâŚ closed to the publicâŚ whatever the independent reviews uncover or determine will remain a well-publicized secret.
- The independent auditors will determine if a given âmistakeâ resulted in financial damages.
- The OCC also mandated the design and publication of a âconsumer complaint review process.â Â The idea is that borrowers who lost homes to foreclosure will now be able to complain to an independent auditorâŚ who will do what?Â Get their house back?Â Send over a hooker?Â What will the independent auditor do in response to a homeownerâs complaint?Â Whereâs the rest of that sentence?
Sorry, stuff like that makes me crazed.Â How can they fail to finish a sentâŚ
- The OCC urged banks to build the consumer complaint process and channel for communication immediatelyâŚ so whatever that means in terms completionâŚ I wouldnât have any idea.Â In fact, truth be told, I donât care when they start, I only care when they finishâŚ and yet the OCC tells me the part of the story I couldnât care less aboutâŚ again.Â Based on the information being provided, Iâd peg the completion date as being sometime between this summer andâŚ the end of time.
- The OCC is saying that borrowers will be GUARANTEED a response from the auditorsâŚ and if they donât get a response from the auditors as they were GUARANTEEDâŚ they get what?Â Their home free and clear? Â No, then whatâs behind the OCCâs guarantee? Â A gift certificate? Â Movie ticketsâŚ come on, give them something.
- The OCC is not disclosing the identities of the companies conducting the reviews.
- Sheila Bair, now a short-timer as chair of the FDIC, argued in front of the Senate Banking Committee this past Friday for both âthoroughness and transparencyâ of these reviews. Â Her point was well taken when she said that, âonly credible and public reviewsâ would be accepted by the general public, and therefore allow the industry to go forward.
- Kathleen Day, for the Center for Responsible Lending, said: âUnless they make that review process public, who is to believe it?Â Weâre supposed to take the banksâ and the OCCâs word on this?â
- The OCC will have law firms reviewing issues such as whether the servicers had proper legal standing in foreclosure cases, and Iâm sure these will be law firms that donât represent banks or want to get future legal work from banks, right?Â Or, not so much.Â Why worry about it, itâs not like weâll ever know one way or the other.
- The auditing of fees and penalties assessed will go to PricewaterhouseCoopers LLP, Navigant Consulting Inc. and Promontory Financial Group LLC, which is funny because these companies are the same companies that were around when the failures in compliance were occurringâŚ and are still occurring, so the question on everyoneâs mind is whether the accounting firm can be credibly independent.Â And I say, after Enron, and the likeâŚ why would anyone think they could?
- I could care less about this entire exercise in futility because only regulators will know the results, so even if they try to present stats on how borrowers were improperly foreclosed upon, I canât imagine anyone saying, âOh, okay then,â and then leaving it at that.
- David Dunn, a partner at the law firm Hogan Lovells, told American Banker:Â âWere there significant numbers of people who were subjected to foreclosures where they shouldnât have been? We donât know the answer to that.â
Well, that may be true, David, but thatâs only because youâre a lazy and dishonest underachiever who hasnât read a book since law school, right?
- Only material errors will be eligible for redress, though the OCC has not yet determined how it would define such a benchmark.
- WellâŚ to wrap things up, I suppose I should say that with findings submitted directly to regulators, like the OCC, and not to the banks themselves, let alone to the public, I think this actually scores a bullâs eye as both the most insulting program design I have ever seen my government announce, and the most uncaring.
- So, very well done, guys and gals in governmentâŚ you have done it once again.Â You have managed to take something of critical importance to millions and after spending time and money, transform it into something entirely worthless.Â Youâve really outdone yourselves and you should be quite proud.
- And then let us not forget the âinsiderâ that came forward to tell me about his experience working as an independent reviewer.Â His story likely didnât drive participation either.
So, GAO peopleâŚ does that help clear things up for you at all as to why the level of participation in the OCCâs quasi-independent and entirely secretive foreclosure review might have been a tad on the low side of expectations.Â Actually, that the OCC or anyone else in government actually thought that anyone at all would participate is a testament to just how out of touch you all are with your constituents.
I mean, at least you managed to get just under 200,000 to close their eyes and say, âThereâs no place like home.â You should be happy that you didnât end up with 20,000 or even 2,000.Â I know, there were supposedly 4.5 million that were eligible, but I think the ratio is correct if you compare those that were supposed to be helped by HAMP with those that actually were.
You reap what you sow, GAO people, you reap what you sow.
And by the wayâŚ am I getting my message across here?Â Please let me know because if my writing is taxing your reading abilities, Iâm sure I can find a homeowner to help me dumb it down to your level.
P.S. And lest you think me entirely unsupportive, you should also know that I also wrote helpful things about the OCCâs promised process, as in âOCCâs Independent Foreclosure Review is Ready for Homeowners.âÂ You see, I try to helpâŚ itâs just that you make it so damn hard.