Wednesday, May 4, 2011

The FDIC Needs to Learn To Use The "F" Word

An investigative report issued yesterday by the FDIC regarding Foreclosure practices by large banks including Bank of America, Citibank, JPMorgan Chase, Wells Fargo, GMAC, Ally and third party providers MERS and LPS and others, is missing some important "F" words.

The 12 page document investigating the breakdown during the "robo signing" scandal outlines what they feel were "inadequacies" during the foreclosure process.

They applied a consistent formula and result to each file review that included:

~ Policies and procedures - Rated "Inadequate"
~ Organizational structure and staffing -Rated "Inadequate"
~ Management of third-party service providers - Rated "Inadequate"
~ Compliance with applicable laws - Rated "Inadequate"
~ Loss mitigation - Rated "Inadequate"
~ Critical document control - Rated "Inadequate"
~ Risk Management - Rated "Inadequate"

"Compliance with Applicable Laws"
Can someone tell me when breaking the law became an "inadequate" offense rather than a criminal offense?

"Affidavit and Notarization Practices"
The investigation found that foreclosure affidavits were signed improperly and failed to conform to State Legal requirements.

The FDIC report misses the first "F" word that needs to be used here. FORGERY.

This was just recently on "60 Minutes" regarding the whole Linda Green story.

Certainly the FDIC watches "60 Minutes" don't they?

Next let's turn to "Documentation Practices":

The investigation found:

"...widespread unsafe or unsound operational practices, including missing documents, execution of documents by unauthorized person, failure to notarize documents in accordance with local laws, inaccurate affidavits..." This is where the FDIC needs to learn the "F" word: FRAUD.

One laughable comment in the report says that Banks need to oversee third party servicers (robo-signers) to:

"...minimize reputation damage..."

What the heck? The FDIC is now giving PR advice? Priceless.

The FDIC evaluates activities conducted through third-party relationships as though the activities were performed by the institution itself."

Does that mean that the institution will be held accountable for third-party actions?

There is no recommendation for penalties or fines. This is a fluff piece with no teeth.

And to top it off it ends with:

"To the extent an institution has a practice of paying law firms, servicers, and employees bonus incentives to process high volumes of foreclosures, the practice should be discontinued"

What the FDIC continues to fail (another "F" word) to understand and question:


Answer: To cover up the massive fraud in the loan paperwork from origination.

The rush to foreclose is to white wash or "launder" the lender fraud that can be exposed in the original loan documents.

Just ask Bill Black.

Predatory Lending is THE Cause For Systemic Mortgage Defaults and Foreclosures.

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