Congress Put Pressure on the Justice Department to go Ahead With Investigations About Foreclosure
Posted on January 10th, 2012
Photo by Brooks Elliott
One section of the Justice Department that monitors bankruptcy cases in courts is known as U.S. Trustees Program. In its annual report of 2010 noted that the mortgage servicing problems were all pervasive and long standing. These were not just technical but result in causing “real harm to homeowners in bankruptcy”.
The Trustee Program has accused the banks of falsifying affidavits by stating that the house owners owe them fees for some services that they never provided; the amount that the borrowers owed to the banks was inflated.
Professor Daniel Richman dealing with criminal law, of Columbia University Law School was formerly a federal prosecutor. He said the pivotal issue was who would be the targets of criminal investigation by the prosecutors.
Richman explained that a good number of workers who under the orders from supervisors churned out large number of affidavits could be sitting ducks. But that would not be worth the effort. Perhaps criminal investigations are necessary but it would be difficult to bring them against particular individuals who actually did the string pulling.
In 2010 October the Congress put pressure on the Justice Department to go ahead with investigations about foreclosure fraud. Eric Holder, the Attorney General said that it would be best to leave the matter to states with Justice Department’s help.
The OCC hastily came to a settlement with fourteen mega servicers to bring about operational changes and suggest compensation for those house owners who had been harmed.
The settlement leaves the banks to select their own agencies to determine who has been harmed and by how much. The arrangement has come in for harsh criticism from legislators and housing advocates for obvious reasons; the reviewing agencies would get their payments from the banks.
Since the eruption of the robo-signing scandal the Justice Department’s civil section has been working with a wobbly coalition comprising of all the fifty states seeking a settlement with the five mega banks that are also the biggest loan servicers. The settlement is leading towards a $20 billion (or maybe more) payment as penalties – a fraction of which would go towards paying the wronged house owners.
Law enforcement by the federal government has been practically non-existent even in those regions that have been decimated by the foreclosure crisis like Las Vegas.
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Congress Put Pressure on the Justice Department to go Ahead With Investigations About Foreclosure
Filed under Foreclosure Crisis, Mortgage, bankruptcy, foreclosure, foreclosures |
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