Lawsuit Seeks ‘Independent’ Facts Behind Foreclosure Reviews


Lawsuit Seeks 'Independent' Facts Behind Foreclosure ReviewsA prominent Washington law firm is suing to get bank regulators to reveal more details behind the failed Independent Foreclosure Review, which after about 18 months and $2 billion spent was mostly scuttled recently in favor of a $9.3 billion settlement.

In its FOIA (Freedom of Information Act) lawsuit filed on March 27, Williams & Connolly wants the Office of the Comptroller of the Currency to provide more details as to the hiring of the independent consultants by some of the biggest U.S. banks in the failed review process.

The suit was brought by partner David Aufhauser in U.S. District Court for the District of Columbia on behalf of an unnamed client. Aufhauser previously served as general counsel of the Treasury Department.

The suit seeks “All documents and/or records relating to the OCC’s definition of independence,” including “Any documents and/or records relating to determining whether any particular independent consultant … was or was not independent.”

Companies including Promontory Financial Group, PricewaterhouseCoopers, Ernst & Young and Deloitte & Touche were hired by mortgage servicers to conduct the reviews.

Williams & Connolly has gained national prominence over many decades. The firm represented Oliver North before Congress and at trial over his involvement in the Iran-Contra scandal. It also successfully represented President Bill Clinton in the first impeachment trial of a sitting president in more than a century.

The OCC initially refused Williams & Connolly’s FOIA request in full, claiming that the law exempts certain reports prepared by supervisory agencies of financial institutions.  Williams & Connolly appealed the request to the OCC in September.

The OCC in December released five pages of partially-redacted documents related to its definition of independence and provided documents that were publically available on its website.  The regulator offered new grounds for withholding information, citing an FOIA subsection which exempts “inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.”

Bank regulators initiated the Independent Foreclosure Review in 2011 after finding deficiencies, errors and potentially wrongful evictions with foreclosures filed in 2009 and 2010 by the nation’s largest mortgage servicers.

In January, the OCC and the Federal Reserve scrapped the reviews for most mortgage servicers, opting to provide about $3.6 billion in compensation to about 4.2 million wronged foreclosure victims. Postcards were mailed out March 18 to eligible borrowers, mostly stating that they would receive payments or more information in four to eight weeks.

An OCC spokesman told eCreditDaily that payments are expected to begin in April. The range is from several hundred dollars to $125,000 for the most serious offense of wrongful foreclosures leading to evictions and other hardships. Regulators have not released a framework for payment amounts.

Lawmakers and consumer advocates have criticized regulators over the handling of the foreclosure reviews and are also seeking more information. There is growing anger and frustration among homeowners that they payouts will not match the wrongdoing. Moreover, the degree of such actions may never be known now that the reviews are no longer in effect for most servicers.

Fed Chairman Ben Bernanke conceded in congressional testimony last month that the failed reviews should have been ended sooner because they were costing too much and producing few results.

“They (the consultants) had not made all that much progress, frankly, and at a very expensive cost per file evaluated,” Bernanke testified. “We were on a track where the money going to the consultants would be some multiple of the money that was suppose to go to the borrowers, and we take responsibility for this…”

In a speech in February, Comptroller of the Currency Thomas J. Curry: “So in late 2012, at the same time we were raising awareness of the Independent Foreclosure Review, we also came to the realization that maintaining our course would significantly delay compensation without appreciable benefit to the affected borrowers. I decided we needed to change direction, and the Federal Reserve came to the same conclusion.”

Curry also said that it was a difficult decision to change course: “I knew that the servicers, independent consultants, community groups, and even some members of Congress had made a personal and concerted effort to support the process and make it work as well as possible.”


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31 Responses to “Lawsuit Seeks ‘Independent’ Facts Behind Foreclosure Reviews”

  1. Consumer Advocate says:

    Be ready to pay about 30% of whatever you receive to the IRS. They will certainly see it as income!

  2. One of the millions involved says:

    Glad other people are wondering and wanting the same answers, they cant call it some justification. In my case I was able to save my home, payed over $ 6,000.00 I do not expect to get it back but why all the drama.I just got over the stress and pain i was at a happy time in my life finally. So someone can tell me they the banks were wrong. Not tell me how or why and give me a few $100.00 and call it even REALLY!!!!! Now I want to know what mistake they made in my case and I want answers and my 100.00 bucks for a mani and pedi, why not its like lost money……

  3. Julia says:

    I ended up having to do a short-sale of my home to avoid a foreclosure sale after Bank of America botched my loan modification agreement. My family was put through hell and I have had to rent a super expensive home for over 2 years because I am not eligible to buy until 3 years after my short-sale. I will be able to buy in the fall and cannot wait! We have suffered for 3 years and they still haven’t even created a framework for payments yet?! The highest payout will be $125,000? So many lost so much. What a slap in the face…..

  4. RacheK says:

    @ Consumer Advocate…..you bet your A$$ the government will get their fair share of this money because they are going to tax the hell out of each and everyone of us. It’s almost as if we are being victimized once again. If the government (and I use that term lightly) would’ve stepped in when this mess started instead of babying these damn banks and giving them bail out money, most of us wouldn’t be in this freaking mess! I seriously think that the reason why we are not being told how much money we are getting until the check arrives is because The IFR is wanting to keep the peace until the very last minute. Think about it……if Rust Consulting, INC. would’ve put the amounts on the infamous post cards that was sent out, imagine the out-cry from the people who are only getting $250.00 & whatever measly amount they decide what we are worthy of. No amount of money can bring back all those sleepless nights most of us endured during our nightmarish ordeals with these worthless banks. I wish the best of luck to each and everyone of those who endured the hell that my family encountered with this mess.

  5. HardWorkingMom says:

    I agree that it is time for all of us to come together and sue the banks and the government. THE BANKS AND THE GOVERNMENT are going to benefit from this AGAIN!
    Banks get to write all of this off…..Government will take their part in taxes. We will get some groceries with it. Wow this nation is starting to become really sad….there is no American dream anymore.

  6. Former WF Customer (dayton) says:

    The longer they drag this mess out, the more money goes to the so called consultants (who have become millionaires and billionaires). The banks jumped on this deal because it is a drop in the bucket for what they truly owe people that were taken advantage of during the mortgage crisis. Hmmmm, I wonder if they are using some of the bailout money they received a few years ago to pay us???

    I received a mailer last week and didn’t think I would ever see a penny from this IFR. I will believe it when I see it. I was able to short sale my property after months and months and paperwork on top of paperwork.

    I will keep you posted on what amount I receive if any.

  7. Tim says:

    It is all bullshit most people have lost a home and their credit destroyed and they are going to throw us a few hundred bucks and say this takes care of your financial injuries while the consultants and everyone else working on this program have gotten rich off what they have charged in fees. Unless you were a service member who was forclosed on expect to get 250 bucks from theses jerks.

  8. joe says:

    Our government once again screws the american family and those who have tried to stay in the home of their dreams…my family lost our home thanks to citibank,who never offered me a loan modification,and posted foreclosure papers on our front door!!! not once but twice!!!they forced us out after a short sale which i owed $177,000.00 on the house when it was appraised a year earlier for $218,000.00,they took $150,000.00 for the hose less a $15,000.00 buyers assistance…we were a victim of foreclosure when i was not in default,plus the robo signing as well…we should all band together and sue these banks…we should all get a minimum of $125,000.00 off of these BASTARDS!!!!!!!!!

  9. KP says:

    Can someone please advise where they are hearing about or reading about the $250.00? I have seen many people reference this amount and I personally have not read or seen any literature regarding $250.00 specifically. Somehow someway someone has seen this because it is in all the comments. Thank you.

  10. hotmess says:

    I read all these comments and it brings me back several years to the loss of our home. PNC couldn’t tell me who owned the mortgage. All they would tell me is that they don’t have to obey President Obama’s guidelines for HAMP modification. And they lived up to their word–they didn’t. My mortgage modification increased my principal by 200,000 so that I’d immediately be under water. My payment increased by $300 or more–I don’t want to remember. I just gave up due to trauma from loss of job, home and family. It makes me livid to remember any of this and the total lack of help from elected officials, government agencies and lenders. 500 years of real estate law was trashed by the greedy and we are nothing but a television/walmart nation functioning like a zombie without any concern except as to who is on Dancing With the Stars. I don’t expect to get anything from the IFR except more bullshit.

  11. Tracy says:

    We lost our home to Bank of America in 2010. The loan was sold to B of A from Country Wide, and then the trouble began. We had a huge decline in income, and trying to be proactive requested a modification. The trail of the modification led us to nothing but heart ache, and of course foreclosure. We never expected any type of monetary compensation for what happened to us, but we do feel that our situation was not handled correctly and that we were basically one of the many victims of a failed banking regulation. So, we’ll see what we get and if we do receive a settlement I am going to use some of the money to “pay it forward”. Since we all know there are still those suffering and who could use a little help. :)

  12. George says:

    We almost lost our house from Wells Fargo. We tried to modify our loan many times when I lost my job but they told us that we had to be in default to even try to modify (?). So, when we were in default they didn’t approve our modification after one year of sending papers and papers. They also changed our contact person many times (an strategy so we are lost on the trail?) We didn’t qualified for the government programs either (based on WF). Finally, we didn’t have any other option than file for bankruptcy. Now, we owe them 40K more which they added to our monthly payments. We are paying now $2,700 compare the $1600 (before the bankruptcy).
    I feel that the government/bank/system gave us a 40k penalty for not be able to work.
    If they send me a $250 check, I am going to send it back with a lot of bad words on the back!!

  13. Blue Star mom - Pissed says:

    This only applies to those that illegally lost their homes under the certain banks they listed. We unfortunately illegally lost our home that was paid off and had no idea until 44 days later. We paid over $35,000 in legal fees but the Housing Court Judge ignored the facts of law, the preponderance of evidence and had absolutely no idea what he was doing. He suggested to our attorney that we consolidate our Superior Court cases and he would get permission to oversee the case. We were told to agree to this because this Judge had a reputation of ruling for the homeowners. Well they mist of meant homeowners who had tenants that were behind in their rent because he had no intention of ruling against the corrupt bank. I was never offered to have a jury trial. I feel thats why he wanted us to consolidate our cases because he had to take every step to make sure he was in control of this case which never should have gone to trial. Our lawyer jumped ship after the UNETHICAL JUDGMENT was made. I feel that the lawyer was intimidated and took an oath to report any illegal actions on behalf of the Judge or defendants attorney. This would have made his life miserable in future cases. Instead he allowed a Military family with a son deployed to lose a home that was paid and never in arrears. Did I mention that we never received any Notice of Default(because none existed) no Notice of Sale, nor was it published in the newspaper. It was bought with an INVALID CREDIT BID by a person that had no legal rights. We didn’t have an underwater mortgage we should have had an invalid loan with these PREDATORY Lenders on a home that was paid off. MA judges are so corrupt!

  14. Marilyn says:

    Can anyone say CLASS ACTION SUIT against all parties involved….$250 per case doesn’t even come close to helping the injured homeowners. The independent foreclosure review only lined the pockets of the consultants costing almost half the money available to compensate those who lost their homes. UNCONSCIONABLE!

  15. Sharon says:

    I will be all over a class Action Suit.

  16. martha says:

    Where is this 250 dollars coming from. If we don’t get paid….. please keep me informed of the Class Action Suit We’ll get those bastards with a lawsuit. We’ll hit the pavement hard, real hard and make head line news. My child and i had to eat noodles every nght. l had to leave items at the gas station just to pay for gas. and l wasn’t even late with my mortage payments …i paid on time. This was Wells Fargo bank….. paid over 80k…. and, twice in bankrupty over 8 years. And still in. l pray that God will release that money to us. “LETS KICK satan IN THE ASS.”

  17. tess says:

    When you called Rust Consultanting did they give you the direct number to your servicer?

  18. Pamela says:

    @tess they give you the number to the Rust Consultants that’s handling your particular mortgage company.

  19. Mark says:

    i went through something similar as julia (april 1st reply), but i also got my credit score dumped 220 points. if anyone thinks tht a lousy $250 is gna cover the interest on my 2013 kia at !5% interest, thts a good joke tell me another one!!!! i do have a twitter account @factsmar

  20. Shana says:

    I was foreclosed by Metlife/First Horizon, I was told that I could not fax my loan modification to them I had to mail them in. I did, they were lost. Contact the attorney who was handling my case, they told me yeah they lose a lot of paperwork email to us, I did. Spoke to the Loss Mitigation Depart, they requested my application again, sent to them. The company’s president office requested the paperwork, emailed it to them. I know I sent my documents to Metlife/First Horizon at least 10 times, each time I was told something different. This went on for 6 months, finally I was told that me and my two children had 10 days to leave. I started looking for a place to go, met a man who told me that he had a place that he would rent to me for $750 a month, just had to make the first and last gave him all the money I had. That was a scam, we stayed with family and friends until I could save more money. I entered a rent to own, so my kids and I would have a stable place, was never late. He decided he did not want to sale the own, so I was just going to rent. Did that for a couple of months, he decided he did not need to return my $3000 dep. from my income tax. Took him to court where the judge said I did not have anything in writing. So again I loss all of my money. I had my home for over 10 years this was my primary residents and the only place my kids had lived at the time. WE have been to hell and back for their errors and if they send me a check for a few hundred dollars I will lose it. I had almost $40,000 in equity in that home. I purchased if for $64,000 in 1999, I moved out in 2010 and it was sold about a year later for $93,000, I feel I should get my equity and fees for all the lying and underhanded actions. If there is a class action suit please let me know I would love to be part of it!!!! Thanks for reading my story.

  21. derrick says:

    I filed a complaint directly to the OCC 11-28-2011 and was given Case #01887017. I also filed for review of my foreclosure in the Independant Foreclosure Review 12-28-2011 and was given Ref.# 1811662791. The case filed with the OCC should have concluded in about 90 days.The OCC deliberately held up giving me a decision for over a year and two months pretending to need information from BoA they already had. Finally on January 30, 2013 I recieved a letter from the OCC stating that my case with the OCC was being dismissed because it was in the scope of the IFR. I filed an appeal. Prior to the dismissal I had been told by the OCC Houston Office Manager Ms. Melinda Goodnight that Mr. Larry Hattix had instructed them not to review my case and to dismiss my case and all cases like mine were to be handled that way. In other words the OCC has thousands of claims filed directly to them like mine they refused to review and dismissed to keep the harm the servicers did to us hidden. My case filed with the OCC was dismissed January 30, 2013 because it feel in the scope of the IFR. By the way I am one of the 53 foreclosed on who was not in default and one of the 2800 original cases reviewed by the OCC in 2010. They did nothing then or now, The things done in regards to the IFR were conspired and more than poor management at work. I have much more proof of this. I am also one of 250 borrowers complaints reviewed by 39 state attorney generals in 2009 which was posted on the internet April 29,2009. Check it out AG’s Take Action on CWN Reports of Foreclosure Abuse. Nothing was done to stop what happened to us by any of them. Our home was sold October 5,2011 to my home church, who tore it down to build a life center.The banks controlled it all. We had one of the first post in August 15,2008,Check it out Countrywide Cashing in on Surprising Group of Homeowners | The Consumer Warnin The OCC, Louisiana Attorney General and Louisiana Office of Financial Institutions all had these internet post and over 50 pages of evidence concerning our complaints and did nothing.

  22. Jeremy says:

    If anyone is wondering they are in fact mailing checks, I got mine today for $800. I don’t think I’m going to cash mine due to $800 not worth messing my taxes up next year. Hopefully some of the other people posting on here will get a bigger check.

  23. Kim says:

    Jeremy you should cash and give to charity then and use the tax write off

  24. Unknown says:

    For those wanting a class action please register and vote. Trying to get everyone interested in one place. So far we have 70 confirmed people wanting a class action lawsuit and 274 registered members http://foreclosurevictims.freeforums.org/class-action-lawsuit-yay-or-nay-t94.html

  25. Jeff says:

    (I am cutting and pasting Tracy’s story from April 1, it is almost identical to our story)
    >We lost our home to Bank of America in 2011. The loan was sold to B of A from Country >Wide, and then the trouble began. We had a huge decline in income, and trying to be >proactive requested a modification. The trail of the modification led us to nothing but heart >ache, and of course foreclosure. We never expected any type of monetary compensation f>or what happened to us, but we do feel that our situation was not handled correctly and t>that we were basically one of the many victims of a failed banking regulation.
    Our Update April 15th, 2013,
    We just received our check for $3000.
    We were forclosed on in Sept. 2011. We lost approx 55k in equity.
    We live in that house for 7 years and never missed a payment.
    We missed our first payment in Aug 2010 due to job loss.
    Within 30 days BOA was sending us “Notice of Accelerate letter”.
    I called BOA 2 or 3 times per week and made notes of every contact.
    They were foreclosing on us at the same time they were saying they were worknig on a modification. In January 2011, we received 3 letters from BOA. Each one saying something different. One said we were denied a mod, one said we were approved for a mod,the iast one said we were being reviewed. When I called them for explanation,
    they acted like they did not know what I was talking about.
    In February, We found a home for sale by owner, and walked away from BOA and we could not be happier.

  26. GW says:

    Remember people, do NOT let them charge you taxes on this, these are legal settlements and are therefore by law, exempt from taxes.

  27. Unknown says:

    That number is now 592, with 197 votes for a class action suit! Getting close enough in numbers to actually start a serious discussion on finding a lawyer etc. Here is the poll, please register and vote! http://foreclosurevictims.freeforums.org/class-action-lawsuit-yay-or-nay-t94.html

  28. Unknown says:

    That number is now 1022, with 340 votes for a class action suit! Getting close enough in numbers to actually start a serious discussion on finding a lawyer etc. Here is the poll, please register and vote! http://foreclosurevictims.freeforums.org/class-action-lawsuit-yay-or-nay-t94.html

  29. Keith Johnson says:

    I would like to join a class action lawsuit to find out what criteria were
    used to determine the amount of the payments that were issued and
    possibly re-negotiate the size of the payments we received.

  30. Sad in MA says:

    Sign up with the petition. http://www.change.org/petitions/occ-and-federal-reserve-reinstate-the-independent-foreclosure-review-for-all-that-applied

    It’s amazing that the OCC said they realized this process was basically taking too long…really? Did they stop to ask us who tried for months and years to keep our homes was the extra time worth it? I kind only find it refreshing if we as citizens demanding our fair share start taking care of ourselves, because it’s our freedoms. Take action write to the Chair of the Senate Banking Committee, the Attorney General in your respective state, Senator Elizabeth Warren. The more we will not concede they’ll have to bring this issue to the table and DO BETTER!!

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