On December 24, 2012, I wrote about the impending demise of the Independent Foreclosure Review program. The program was pronounced dead on arrival yesterday. Although the OCC cited many issues with the program as the basis for ending it, including the difficulty of conducting the reviews and the limited response from consumers, it seems clear that the program was shuttered due to the pending negative report the GAO was about to release.
Instead of the foreclosure review, the banks have agreed to pay out $3.3 billion to the 3.8 million borrowers affected by the foreclosure crisis during 2009 and 2010. That amounts to $890 per person. The settlement will not attempt to determine where things went wrong, who was actually harmed, and to what extent they were harmed.
Now, the process will involve the banks and servicers deciding how people were harmed and classifying them into 11 different categories. High-priority mistakes will qualify for large payouts in the 6-figure range. Others will qualify for payments as low as $250. The OCC has yet to release any details regarding the settlement and has only promised to release a rough outline of the settlement and how it will work.
This lack of transparency seems to be par for the course in our modern regulatory scheme, and its a bit disenheartening. For every great thing that the CFPB does, deals like this one simply undermine the authority and trustworthiness of federal regulators. Hopefully details will leak out over time, much like they did with the Independent Foreclosure Review. Only time will tell.
For more coverage on this issue, I highly recommend this ProPublica article.