For Homeowners − Large Loan Servicers…BAD − Community Banks…GOOD

by Ken Kappel on May 10, 2011

The following article clearly shows that when comes to Robo-Signing and Foreclosure Gate, the major Too Big To Fail Banksters who serve as Loan Servicers (all of them) are the bad actors, the malefactors set up against homeowners receiving a “fair short sale” or a “free Loan Modification.”  Why?  Simple.  They make more money foreclosing on you.

We’re proud to present an article by Carrie Bay, originally posted over at that great article aggregator, DSNews.  The article is titled: “FDIC Releases Report Detailing Findings of Foreclosure Investigation“, by Carrie Bay.

“The FDIC released a special foreclosure edition of its Supervisory Insights journal series Wednesday.  The FDIC says the report highlights “lessons learned” from the interagency review of processes and procedures at the nation’s 14 largest residential mortgage servicers, which was prompted by the robo-signing issues that surfaced last fall.” [Emphasis Added.]

“This regulatory probe resulted in consent orders with all 14 servicers, as well as two firms that provide foreclosure-related services to the industry.  The FDIC explained that these consent orders are intended to remedy the “unsafe or unsound practices” identified by the regulatory investigation, namely “lax foreclosure documentation, ineffective controls over foreclosure procedures, and deficient loss mitigation procedures and controls.”

Ken here. Well – Yeah.

“The federal agency says it recognizes that residential foreclosures have “increased dramatically” since 2006 and that the sheer volume of foreclosures falling on the top servicers resulted in their “failure to properly manage the servicing process.” [Emphasis Added.]

“Many institutions failed to commit the resources needed to handle the rapidly growing volume of mortgage loans in default or at risk of default, the FDIC said in its report. In addition, the agency says weak governance and controls increased legal, reputational, operational, and financial risks while creating unnecessary confusion for borrowers.”  [Emphasis Added.]

Ken here.  They want you confused, that’s one reason, only one reason, they don’t teach basic financial principals and procedures in high school.

“According to the FDIC’s report, the problems uncovered are principally isolated to the largest servicers.”

“Most federally insured depository institutions that owned or serviced residential real estate loans during this time have been affected by this dramatic increase [in foreclosures], but the delinquency rates on loans originated by community banks have been far lower than at the nation’s largest institutions,” the FDIC stated.”  [Emphasis Added.]

“In fact, the top 14 servicers were responsible for processing the vast majority of foreclosures. Servicing problems also have been more common at large institutions,” the agency said.”

“As the primary federal regulator of state nonmember banks, which collectively service less than four percent of residential mortgages, the FDIC says it has been reviewing and conducting targeted exams to determine whether any of these institutions have engaged in the types of practices identified at the major servicers.”

“To date, the review has not identified ‘robo-signing’ or any other deficiencies that would warrant formal enforcement actions,” the FDIC stated.”

Ken here. That proves our point, Community Banks are good for homeowners.

“The federal agency says though it “has not identified serious industry wide problems among state nonmember banks, the well-publicized problems of large servicers, combined with growing litigation over ‘robo-signing’ … indicates that community banks should promptly review their servicing practices.”

“The FDIC’s full report can be accessed online”

Ken here.  This report clearly shows that when it comes to Robo-Signing and Foreclosure Gate, the major Loan Servicers are the bad actors, the very ones responsible for fraudulent lending, which created the housing bubble and the housing bust.

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