Fed Report Finds No Wrongful Foreclosures By Banks, Consumer Advocates Slam Methodology (via Huffington Post)

WARNING – I will be venting my contempt angrily and pointedly.

First here’s the story – from the Huffington Post’s Business Reporter, Shahien Nasiripour.

A months-long investigation into abusive mortgage practices by the Federal Reserve found no wrongful foreclosures, members of the Fed’s Consumer Advisory Council said Thursday.

During a public meeting attended by Fed chairman Ben Bernanke and other regulators, consumer advocates on the panel criticized federal bank regulators for narrowly defining what constitutes a “wrongful foreclosure.” At least one member of the panel voiced concerns that the public would not take the Fed’s findings of improper practices seriously, since the wide-ranging review did not find a single homeowner who was wrongfully foreclosed upon.

Potemkin Village

Let’s see, how about some good descriptors. Which one is best? Fanciful, comedic, ridiculous, fantastic, bizarre, Potemkin like, Red Queen thinking, the king has no clothes, the same firm grasp of reality of Norman Bates, pitifully deluded, an administration without heart, courage or brains, a triumph of corporate PR over every shred of reality, a view from the predators’ terrace, …

I have three ideas for appropriate comparisons, the Potemkin Village, Baal worship and the music of the spheres.

First, the Potemkin Village:  … there were fake settlements purportedly erected at the direction of Russian minister Grigory Potyomkin to fool Empress Catherine II during her visit to Crimea in 1787. According to this story, Potyomkin, who led the Crimean military campaign, had hollow facades of villages constructed along the desolate banks of the Dnieper River in order to impress the monarch and her travel party with the value of her new conquests, thus enhancing his standing in the empress’ eyes.

It would appear that Obama’s soulless minions (retreads from the banking industry) think that Americans are gullible beyond belief or perhaps this is for the consumption of the great man himself. Maybe he is so removed from the tiniest vestige of reality that he is simply immune to the suffering of his countryman?

How about Baal worship? Small children were placed inside a metallic idol and cooked alive while the followers of the great god chanted and sang drowning out the screams of the victims. The listeners believed that the children were carted painlessly into the next world, a comforting delusion.

Too Strong? The newspapers, blogs, even the financial pages have been full of stories, one after another, discussing illegal foreclosures. But not just there, on television, cable, the radio,.. Can’t they hear or see?

Or the Music of the Spheres, in the time of the Greeks it was believed that we were all encased in multiple clear crystal spheres, one for the moon, another for the sun, and so on. The great majority of mankind, the lumpen mass, the pathetic herd were condemned by their lack of perception to a perpetual half life while those who were special could hear the music these spheres gave off, making them insiders to the secrets of the universe.

Are they so far above us that our voices are just a quiet drone against the elegant music  of a higher order?

What’s your preference?

Let’s try some reality. From The Washington Post, a column by Dana Milbank

The problem in the nation’s housing market now isn’t subprime lending. It’s subpar lenders.

Last fall, my wife and I refinanced our mortgage with Citibank. Sixty days later, we received a “cancellation notice” from our homeowners insurance company “for non-payment of premium.”

Turns out Citibank, which had been collecting hundreds of dollars a month from us to pay the insurer, hadn’t made the payments. It was, I later learned, one of the usual tricks mortgage servicers use to squeeze more cash out of their customers. About a month later, I learned of another trick: Citibank informed us that it was increasing our monthly payment by nearly $300.

Along the way, a simple refi became a months-long odyssey: rates misquoted, interest charged on a phantom account, legal documents issued in wrong names, a mortgage officer who disappeared for days at a time (first it was his birthday, then his laptop was in the shop), a bounced check from Citibank’s own title company, and the freezing of our bank accounts.

For me, this amounts to no more than the hassle of arguing with Citibank to fix its “mistakes.” But consumer advocates tell me these are typical of the screw-ups by the big banks that service home mortgages. And these errors – accidental or otherwise – are driving large numbers of people into default and foreclosure when it otherwise would not have happened.

How about that? Let’s hear a little more.

My wife and I are reasonably savvy consumers – she has a brand-name MBA, and I began my career as a business reporter for the Wall Street Journal – but we were no match for a bungling bank. After five months of trying, we still haven’t been able to resolve all of Citibank’s mistakes – nearly all of them, curiously, in the bank’s favor.

Of all the miscues, the highlight was when we were handed, at closing, a large check that we didn’t want for a new home-equity line of credit. I tried to redeposit it into the home-equity account but was told that the account did not yet exist. I tried to deposit it into my checking account, and the check was returned unpaid – while interest accrued.

That so much can go wrong with such a simple refinance doesn’t bode well for the 5.5 million homeowners in default (on top of the 3 million already foreclosed). It’s impossible to know for sure, but by some estimates, half of them are victims of some form of servicers’ errors.

“What happened to you,” Ira Rheingold of the National Association of Consumer Advocates told me, “happens to people every single day.” And it will continue, with its resulting drag on the economy, unless and until the big banks can be brought to heel.

Is this all I’ve got? No, I can shower you with examples of vicious cruelty, lies, and every kind of chicanery resulting in wrongful foreclosures.

James Pilant