The Money in the OCC’s Cancelled Independent Foreclosure Review



A little over a week ago, we all saw the news that the OCC’s Independent Foreclosure Review (“IFR”) was cancelled… or rather… “settled” for something like $8.5 billion. A lot of people wrote about how they were outraged over the whole thing, but I wasn’t… so I didn’t.

First of all, I thought it was pretty obvious that the whole idea was more than flawed from the beginning, so the fact that it was turning out to be another failed government program in response to the foreclosure crisis was hardly surprising.

And secondly, I said that before I would be willing to get upset over the IFR being cancelled, I wanted to know how much the OCC was planning on awarding someone who was underwater and delinquent even if something was found to be wrong with foreclosure process.

Well, below is the information needed to answer the question of the money that was to be involved in the OCC’s IFR. It’s the OCC’s “Financial Framework.”  It shows how much money a borrower would have gotten depending on what was uncovered about the foreclosure.

I got it from an insider, but I’ve noticed it now published on-line so it’s not a secret at this point.

Now, it’s worth mentioning that the OCC IFR and I assume the settlement that’s forthcoming won’t prevent a homeowner from pursuing other avenues such as filing their own lawsuit, but that’s just more blah, blah, blah… as far as I’m concerned.  The IFR’s FAQ says…


“… there may be some cases where a borrower believes that additional compensation is warranted. In those cases, borrowers may pursue other available legal remedies.”


It’s hard for me to imagine having to sue JPMorgan Chase under any circumstances.  I don’t know what it would cost, but I don’t think it’d be inexpensive.  But, if I just lost my home to foreclosure… after not being able to make my mortgage payments for a couple years… well, I just can’t imagine being able to come with the money needed to sue one of the world’s largest banks for even the most egregious of offenses.  I mean, maybe if I had truly been current when I lost my home, or maybe if the foreclosure occurred when I was on active duty fighting in Iraq, but  in either of those instances chances are I’d already be suing or have already sued… and won.

Suing for something like a robo-signer signing an Assignment of Deed of Trust, or for being improperly denied for a loan modification?   I don’t know… would I really be willing or able come up with the tens of thousands it would take to bring such a suit that would take years and that I very well might not win?  I just don’t know… I really do not know.


So, it would seem that for the vast majority of people who went through the foreclosure process in 2009 and 2010, the OCC IFR will be “it” as far as “direct remediation for wrongdoing” is concerned.  But, since only 10 percent (approximately) of those that were eligible for the review bothered submitting their case to the OCC IFR, that’s the population with the potential to lose something as a result of the program’s cancellation.


Roughly, we’re talking about 450,000 people.  Keep in mind, as you’re reading the “Financial Framework” chart below, that if each had received $2,000… the total would only be $1.35 billion… if each had received $4,000 then the total would have only been $2.7 billion… if each got $8,000, then it would have totaled $5.4 billion.  But now, under the settlement approach, something close to 4 million homeowners are set to receive some sort of financial remediation, according to USA Today.


“More than 3.8 million borrowers whose home loans at these 10 banks were foreclosed on in 2009 and 2010 will receive some compensation in a timely manner, regulators said.”


Is that better than what would have otherwise happened?  It sure as heck looks like it to me.  I’m not saying it’s right… any of it.  I’m still cranky over the fact that I wrote well over a hundred articles about this happening, while it was happening in 2009 and 2010, and no one did a damn thing about it at the time.


What I am saying is that it doesn’t look to me like canceling the OCC IFR saved the banks money, in fact it looks to me like it cost banks quite a bit more than they would have paid under the IFR’s “Financial Framework” as shown below.  I know, they made it sound like some folks would be getting $125,000… yeah… but, by looking at the definitions in the FAQ, I just can’t help but wonder how many?  And by when?


Unless you count what PriceWaterhouse Coopers, Promontory, and the other consultants would have received, because they were the clear winners in this OCC designed Stupidity Sweepstakes.  I know, everyone wants to blame the banks for everything, but this one wasn’t the banks’ doing.


One last thing… I don’t think it’s even possible to adequately compensate someone for going through the hell of 2009 and then losing a home… by writing a check.  Instead… how about we review someone’s situation and based on what happened, we start helping people get into a new home they can afford with some sort of government guaranteed loan at 2 percent, instead of selling the homes to investors looking to become the slum lords of tomorrow?  Is that such a difficult thing for our federal government to figure out?


We can fight a global war on terror, but the whole in-or-out-of-houses thing has got the brain trust at the Obama administration completely stumped, is that what I’m supposed to believe?


All I want to say to that is, “Negro please,” but that has nothing to do with anyone’s actual race so don’t send me letters.  It’s just the right thing to say in response to such a pile of fresh steaming nonsense.  If anyone in government WANTED to fix it, they COULD fix it.  It has long since become abundantly clear that they just do not care.


Okay, so whatever.  Take a look for yourself… scroll down and see the numbers that were involved in the OCC’s IFR “Financial Framework” before it was cancelled in favor of the $8.5 billion settlement.  Also, the OCC says that you need to read the Frequently Asked Questions about the IFR to understand the Financial Framework, so there’s a link to the IFR’s FAQ.


For example…

10. What is meant by “Borrower Not in Default” for category 2?

Under category 2 in the Framework, the terms of the borrower’s original mortgage or permanent loan modification agreement will determine whether or not the borrower is considered to be in default. Generally, a borrower who is current on all required payments is not considered to be in default.


And I’m sure there were just tons of those.


So… is it just me?  It’s not that I don’t care about this remediation stuff.  But, I mean… LPS says there are something like 5.35 MILLION loans over 30 days delinquent… about 3.3 MILLION considered seriously delinquent and in pre-foreclosure inventory.  What are we doing about those numbers?  What are we doing differently about homeowners at risk of foreclosure today than we did starting back in 2009?  Anything?  Has even one thing been fixed or even improved by the government?  Please tell me… I must be missing it.


Mandelman out.

OCC Independent Foreclosure Review "Financial Framework" from Martin Andelman

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