Control Fraud


Control Fraud

By: Jim Macklin
Secure Document Research

The term “control Fraud” was originally coined by Professor William Black, UMKC. A control fraud essentially starts as a core methodology for the exaction of some enterprise or movement, whether in commerce or at law. The instigators of a control fraud typically have their own self-interests as the motivation for participants to either ignore regulations or laws, or worse yet, to politically pressure or lobby for policy change that suits their agenda(s).

It mattered not that “liar loans”, defective underwriting processes, and securitization obviations were the norm during the run-up to 2008. The control fraud was in place to facilitate complete immunity from prosecution for the big money players at the top of Wall St. Every associated business that derived its income from the mortgage-backed bond sales was expected to follow the guidelines, as set by the fraudsters, or suffer the fate of not working. Everyone from bond insurers, hedge fund managers, realtors and property appraisers had to bend to the poisonous curve…or lose their competitive edge, and thus, their livelihood. When lying becomes the standard upon which your paycheck relies, you are a liar by proxy.

Continue reading “Control Fraud”

Independent Foreclosure Review Claims Due by 12/31/2012

Independent Foreclosure Review Claims Due by 12/31/2012

By Daniel Edstrom

Claims for the wrongful actions of servicers are due under the Independent Foreclosure Review by 12/31/2012. Claims can be entered through the Independent Foreclosure Reviews website at https://independentforeclosurereview.com/

The Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System have oversight. Mortgage servicers involved are the following:

  • America’s Servicing Co.
  • Aurora Loan Services
  • BAC Home Loans Servicing
  • Bank of America
  • Beneficial
  • Chase
  • Citibank
  • CitiFinancial
  • CitiMortgage
  • Countrywide
  • EMC
  • EverBank/EverHome Mortgage Company
  • Financial Freedom
  • GMAC Mortgage
  • HFC
  • HSBC
  • IndyMac Mortgage Services
  • MetLife Bank
  • National City Mortgage
  • PNC Mortgage
  • Sovereign Bank
  • SunTrust Mortgage
  • U.S. Bank
  • Wachovia
  • Washington Mutual
  • Wells Fargo
  • Wilshire Credit Corporation

Fannie Mae Announces Year-End Servicer Performance Scorecard Results

Fannie Mae Announces Year-End Servicer Performance Scorecard Results

By Daniel Edstrom
DTC Systems, Inc.

Quote from news release dated March 15, 2012:

The STAR Program was created to establish standards and recognize excellence among Fannie Mae servicers in their overall performance, customer service, and foreclosure prevention efforts.

Another Quote:

Overall STAR performance rankings are issued on an annual basis each April.

Apparently Fannie Mae missed the flood of Cease and Desist Consent Orders issued by various government regulators on April 13, 2011 for unsafe or unsound foreclosure policies and practices.  The government regulators were the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Federal Housing Finance Agency.

Fannie Mae has apparently missed the fact that nothing has changed and the servicers are not abiding by the Cease and Desist Consent Orders, unless they are doing this in secret or on a limited basis.

Here is the text of the news release, followed by the STAR Scorecard results for the previous quarters in 2011. Continue reading “Fannie Mae Announces Year-End Servicer Performance Scorecard Results”

Who is Responsible for the Conduct of Foreclosure Mill Law Firms?

Who is Responsible for the Conduct of Foreclosure Mill Law Firms?

By Daniel Edstrom
DTC Systems, Inc.

Here is the analysis, which comes word for word from the Interagency review of Foreclosure Policies and Practices in 2010 (available here: http://dtc-systems.net/wp-content/uploads/2011/04/InterAgency_Review_4900701.pdf).

The Federal Reserve System, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS), referred to as the agencies, conducted on-site reviews of foreclosure processing at 14 federally regulated mortgage servicers during the fourth quarter of 2010.

This report provides a summary of the review findings and an overview of the potential impacts associated with instances of foreclosure-processing weaknesses that occurred industrywide. In addition, this report discusses the supervisory response made public simultaneous with the issuance of this report, as well as expectations going forward to address the cited deficiencies. The supervisory measures employed by the agencies are intended to ensure safe and sound mortgage-servicing and foreclosure processing business practices are implemented. The report also provides an overview of how national standards for mortgage servicing can help address specific industrywide weaknesses identified during these reviews. Continue reading “Who is Responsible for the Conduct of Foreclosure Mill Law Firms?”

The OCC Misses the Point on Toxic Waste

The OCC Misses the Point on Toxic Waste

By Daniel Edstrom
DTC Systems, Inc.
http://www.dtc-systems.net

We all see what we want to see.  But when others control the conversation, it is easy to miss the point.  As a regulator the Office of the Comptroller of the Currency should be taking the lead and controlling the conversation, but in reality, they have been bridled and are being led around by the nose.  Conspiciously absent are numerous issues they as a regulator have the responsibility of dealing with.  This article is timely in response to an article by Neil F. Garfield (http://livinglies.wordpress.com/2011/12/27/the-big-lie-banks-did-nothing-illegal/), which is a response to Yves Smith of Naked Capitalism article (http://www.nakedcapitalism.com/2011/12/more-msm-criticism-of-obama-nothing-illegal-here-move-along-stance-on-foreclosure-fraud.html), which is a response to a Reuters article (http://www.reuters.com/article/2011/12/22/us-foreclosures-idUSTRE7BL0MC20111222).  But I found none of these articles until I was finished writing this post.  Take the following random and critical issues:

  • Are the loans in the pool?  Were the loans ever in the pool?  Does the pool exist?  Did the pool perfect interest in any of the loans?  This issue is very political and the OCC in our opinion will never address this issue or look into this.
  • What loans are in default?  Can a loan be in default?  What comes first, the default or the loss?
  • Are there any compliance issues?

Continue reading “The OCC Misses the Point on Toxic Waste”

OCC Guidance on Potential Issues With Foreclosed Residential Properties

Guidance on Potential Issues With Foreclosed Residential Properties

By Daniel Edstrom
DTC Systems, Inc.

The Office of the Comptroller of the Currency has issued the following guidance in respect to foreclosed properties:

OCC 2011-49
Subject: Foreclosed Properties

Date: December 14, 2011

To: Chief Executive Officers of All National Banks and Federal Savings Associations, Department and Division Heads, and All Examining Personnel

Description: Guidance on Potential Issues With Foreclosed Residential Properties

Background
In the current economic environment, national banks and federal savings associations (collectively, banks) are facing challenges resulting from unprecedented numbers of troubled residential mortgage loans. Foreclosures on residential properties also are occurring in unprecedented numbers and are projected to continue this trend in the near term. Among the many consequences of high levels of foreclosures are growing inventories of foreclosed residential and commercial properties. The Office of the Comptroller of the Currency (OCC) is providing guidance to banks on obligations and risks related to foreclosed property. This guidance highlights legal, safety and soundness, and community impact considerations.1 It primarily focuses on residential foreclosed properties, but many of the same principles apply to commercial properties. Continue reading “OCC Guidance on Potential Issues With Foreclosed Residential Properties”

Office of the Comptroller Handbook: Internal Control

Office of the Comptroller Handbook: Internal Control

By Daniel Edstrom
DTC Systems, Inc.

Understanding the Cease and Desist Consent Orders begins by understanding safe and sound banking.  The foundation of safe and sound banking is effective internal controls.  This handbook discusses Internal Control for National Banks.  Consider the following handbook quote:

 Effective internal controls are the foundation of safe and sound banking. A properly designed and consistently enforced system of operational and financial internal control helps a bank’s board of directors and management safeguard the bank’s resources, produce reliable financial reports, and comply with laws and regulations. Effective internal control also reduces the possibility of significant errors and irregularities and assists in their timely detection when they do occur.

In the Cease and Desist Consent Orders issued on April 13, 2011 the Office of the Comptroller is essentially saying the following:

Ineffective internal controls are the foundation of unsafe and unsound banking. A poorly designed and inconsistently enforced system of operational and financial internal control inhibits a bank’s board of directors and management from safeguarding the bank’s resources, from producing reliable financial reports, and from complying with laws and regulations. Ineffective internal control also increases the possibility of significant errors and irregularities and assists in the failure of their detection during their occurance as well as long afterwords.

 The Comptroller’s Handbook defines Internal Control as follows:

Internal control is the systems, policies, procedures, and processes effected by the board of directors, management, and other
personnel to safeguard bank assets, limit or control risks, and achieve a bank’s objectives.

The Comptroller’s Handbook says the following about regulatory requirements:

National banks must adhere to certain regulatory requirements regarding internal control. These requirements direct banks to operate in a safe and sound manner, accurately prepare their financial statements, and comply with other banking laws and regulations. The laws and regulations that establish minimum requirements for internal control are 12 CFR 30, Safety and Soundness Standards; 12 CFR 363, Annual Independent Audits and Reporting Requirements; and 15 USC 78m, Securities Exchange Act of 1934.

12 CFR 30
12 CFR 30, Safety and Soundness Standards, establishes certain managerial and operational standards for all insured national banks, including standards for internal control. Appendix A to 12 CFR 30 states that a national bank should have internal controls that are appropriate to the size of the bank and the nature, scope, and risk of its activities, and that provide for

• An organizational structure that establishes clear lines of authority and responsibility for monitoring adherence to prescribed policies.
• Effective risk assessment.
• Timely and accurate financial, operational, and regulatory reports.
• Adequate procedures to safeguard and manage assets.
• Compliance with applicable laws and regulations.

When a national bank fails to meet these standards, the OCC may require management to submit a compliance plan to address internal control deficiencies. If the bank fails to submit a satisfactory plan, the OCC must, by order, require the bank to correct the deficiency.

This is pretty much the action that the OCC has taken in the Cease and Desist Consent Orders.  It should also be of significance to note that the actions taken in many cases under the Cease and Desist Consent Orders were directed to some of the largest national banks under complex financial engineering transactions.

Download the Comptroller’s Handbook on Internal Control: http://dtc-systems.net/wp-content/uploads/2011/11/intcntrl.pdf

Interim Status Report: Foreclosure-Related Consent Orders

Interim Status Report: Foreclosure-Related Consent Orders

By Daniel Edstrom
DTC Systems, Inc.

The Office of the Comptroller of the Currency has released an Interim Status Report regarding the Foreclosure-Related Consent Orders.  The November 2011 report is available here: OCC Interim Status Report for November 2011

Independent Foreclosure Review Engagement Letters

Independent Foreclosure Review Engagement Letters

By Daniel Edstrom
DTC Systems, Inc.

The Office of the Comptroller of the Currency has posted the following on its website (http://www.occ.gov/topics/consumer-protection/foreclosure-prevention/independent-review-foreclosure-letters.html).

Independent Foreclosure Review Engagement Letters

Below are links to engagement letters submitted by the independent consultants, retained by servicers regulated by the OCC, who will be conducting foreclosure reviews pursuant to the requirements of the April 13, 2011 consent orders.  The engagement letters describe how the independent consultants will conduct their file reviews and claims processes to identify borrowers who suffered financial injury as a result of servicer deficiencies identified in the OCC’s consent orders.

Limited proprietary and personal information has been redacted from the engagement letters.  Examples of information that has been redacted include, but are not limited to: names, titles and biographies of individuals; proprietary systems information; references to specific bank policy; fees and costs associated with the engagement; and specific descriptions of past work performed by the independent consultants.

Since the acceptance of the engagement letters in September of this year, the independent consultants have further refined and made adjustments to the processes, procedures, and methodologies outlined in the engagement letters in consultation with OCC supervision staff.  Therefore, in many cases the review processes being implemented may differ in some respects from those described in the engagement letters because of subsequent coordination with the OCC.  In particular, there were a number of changes made to integrated claims process to ensure a single, uniform process among the servicers.

Pursuant to 12 C.F.R. § 4.12(c), the disclosure of the engagement letters at the OCC’s election has no precedential significance.

Interagency Independent Foreclosure Review – File Your CLAIM

Interagency Independent Foreclosure Review – File Your CLAIM

By Daniel Edstrom
DTC Systems, Inc.

The following regarding the numerous Cease and Desist Consent Orders issued against servicers and others for unsafe or unsound foreclosure policies and practices is available here: http://www.independentforeclosurereview.com/

Independent Foreclosure Review

Looking for information about the Independent Foreclosure Review? Si usted habla español, tenemos representantes que pueden asistirle en su idioma.

Homeowners whose primary residence was part of a foreclosure action between January 1, 2009 and December 31, 2010, and whose home loan was serviced by a participating servicer, may be eligible for an Independent Foreclosure Review.

The Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency (federal bank regulators) have required an Independent Foreclosure Review by an independent consultant to identify eligible customers who may have been financially injured due to errors, misrepresentations or other deficiencies in their foreclosure process. If the review finds that financial injury occurred, the customer may receive compensation or other remedy.

To qualify, your mortgage loan would need to meet the initial eligibility criteria: Continue reading “Interagency Independent Foreclosure Review – File Your CLAIM”