The federal government is giving up on its hunt for foreclosure fraud. What a waste that has been.
Over at the Huffington Post they’re still talking about “rampant foreclosure fraud.”But I was always skeptical of claims banks were stealing houses from innocent homeowners. One big problem with that theory: Banks lose money on virtually every house they take back in foreclosure. And now the federal government seems to agree.
With a pair of terse notices yesterday, the Office of the Comptroller of the Currency basically admitted that its elaborate process for turning up evidence of fraud in hundreds of thousands of loan files was a waste of money.
With the $8.5 billion settlement with Bank of America, Citi and other lenders, the government abandoned the Independent Foreclosure Review and switched to a system of direct grants to foreclosed borrowers, details to come. In a statement, Comptroller of the Currency Thomas J. Curry said “it has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers.”
The New York Times reported today concerns grew “in the upper echelons of the comptroller’s office” at the cost of the loan reviews, which consumed up to 20 hours per file at $250 an hour. Banks spent $1.5 billion on this snipe hunt without turning up meaningful examples of fraud, the Times reports. That money could have been handed out to borrowers in the form of a $5,000 check for each file.