"We know about the toothless consent decree on mortgage servicing by OTS, OCC and the Fed. I believe this undermines the AG settlement, but I wasn’t particularly wedded to that settlement, which suffered from many of the same problems and already looked dead in the water. It’s possible that this could turn out very well for the banks: they accept the weak servicing reforms that they get to dictate, they reject the $20 billion penalty for their actions and dare the AGs to come after them with expensive litigation.
However, some states are already taking a different approach. New York’s Eric Schneiderman hassubpoenaed foreclosure mills and asserted his desire to prosecute in the past week. The landmark Louisiana bankruptcy court ruling demands sanctions for LPS for using illegal documents to try and prove ownership in a foreclosure case. Here’s what the US Bankruptcy judge wrote in the ruling: “The fraud perpetrated on the Court, Debtors, and trustee would be shocking if this Court had less experience concerning the conduct of mortgage servicers. One too many times, this Court has been witness to the shoddy practices and sloppy accountings of the mortgage service industry.” The courts and the more decent public servants are ready to roll.
Congress doesn’t have much to do with this process, which is focused on law enforcement. But some Congressional Democrats have been vocal about the ineffectiveness of the OCC-led consent decree. Clearly it’s a ridiculous way to “punish” the banks without any punishment attached to it. Today, they released the Foreclosure Fraud and Homeowner Abuse Prevention Act, and while I don’t see John Boehner singing on as a co-sponsor anytime soon, it shows a good roadmap to solving this crisis and extracting real accountability on the perpetrators of criminal fraud. Sherrod Brown introduced it in the Senate, Brad Miller in the House"..........read more here
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