The Independent Foreclosure Review is dead. Long live the Independent Foreclosure Review.
When word came out about this so-called "independent" process last year, few bought into it. I certainly never did, and most homeowners knew from the beginning that it lacked any pretense of integrity.
It essentially came out of last year's $25 billion mortgage settlement, as a way to placate those victimized during the robosigning era. But the banks, if they weren't in charge, still had their hand in how the program was plotted from the very beginning.
It was never independent, that was the biggest oxymoron if there ever was one. Banks hired the reviewers, who were basically unemployed ex-mortgage brokers; paid the reviewers; in some cases actually provided answers to them.
This program was a contaminated cesspool from the very start. It was unsalvageable, and it was never going to do anything for any true victims of foreclosure.
The whole thing was a hoax.
So as this latest $8.5 billion settlement with 10 of the largest banks and servicers goes public, perhaps the best news is this sham of a review process is going the way of Old Yeller.
The irony of course is that the banks, and not the homeowners, were the ones who pulled the trigger. They realized it was better to throw in the towel now than face their own mistakes.
The mistakes they once told us didn't exist but in fact were so rampant that these reviews were taking too long and costing too much.
As flawed as I suspect the review process was, there must have been enough there that was scaring the banks enough that they felt their best option was to cough up even more cash for homeowners.
Fraud on Fraud is where you commit a second fraud to try to cover up the first. What this latest settlement tries to do is cover up the flaws of the first settlement. So what we essentially have here is settlement on settlement.
Better for them to throw money at us than face the harsh light of day. The banks recognized it was going to be too expensive and too unwieldy for them to go through with these reviews.
So yes, many of their mistakes will stay locked behind the vault, away from prying eyes, just where the servicers want them to stay.
That being said, for our economy, this settlement will do more good than the Independent Foreclosure Review ever could.
$3.5 billion additional dollars will go not to the federal government but directly to homeowners. That's real taxpayer money that's going directly to Main Street instead of Capitol Hill.
The rest will go to more loss mitigation, more short sales, more loan modifications and more waived deficiencies. So homeowners will benefit from this latest settlement.
The housing market will continue to heal and this embarrassing chapter in U.S. banking history won't fester any more than it needs to. For everyone's sake, the theory goes, we do need to move on.
The government has done such a lousy job in investigating this whole thing that I'm afraid this might be the best we can do.
This settlement is the closest we will get to the government admitting that this process was ridiculous, and I take a small amount of solace in their de facto acknowledgment.
The Justice Department really should be ashamed of themselves. There was fraud at a systemic level but the banking industry is still Too Big To Jail, at least for now.
So if homeowners are to get any comfort it's going to be in these little settlements, these footsie deals with Wall Street meant to satiate the taxpayer.
The $25 billion settlement was a joke. This settlement is also a joke.
But it is less of a joke than the foreclosure review process, which was an ultimate failure.
So to the Independent Foreclosure Review, I say rest in peace. You will not be missed.
Real estate attorney Roy Oppenheim left Wall Street for Main Street, founding Oppenheim Law along with his wife in 1989 in Fort Lauderdale, Florida, and is vice president of Weston Title. He is also creator of the South Florida Law Blog, named the best business and technology blog of 2011 by the South Florida Sun-Sentinel.
- Politics & Government
- Company Legal & Law Matters