Fwd: Bank Lawyer's Blog - Sign Now, Fine Later

Re-posted by Houston Lawyer and Law News - Reports issued today indicate that the nation's largest mortgage loan servicers have begun signing consent orders with their primary federal banking regulators that "require [the servicers] to strengthen their systems for handling foreclosure documents and communicating with borrowers who are behind on their payments...[and]...require firms to improve auditing and risk-management practices..." 

 

One of the people said the agreements also would assign responsibility to boards of directors to supervise loan servicing more closely.

 

The theory is that if the board of directors has responsibility to supervise loan servicing, then it will be supervised properly. Yeah, I can see Mukesh Ambani threshing through the weeds of loan servicing minutiae and getting a tight grip on the handle. I'm sure you can name another director who'd be your favorite overseer of proper loan servicing, can't you?

 

In an interesting twist on the usual template for settlements such as this, the settlements do not include any monetary penalties on the loan servicers. Instead, the parties "continue to negotiate" the fines. You would think that the banks would want to get something as important as the size of the fines wrapped up in a global settlement. On the other hand, perhaps that means that the fines aren't going to be that huge, and the government wants the good news to come out publicly before the bad news dribbles out somewhere down the road. I guess we'll know when we know, eh?

 

Jamie Dimon made his public mea culpas with the appropriate grace notes one expects of that smooth dog regarding the "robo-signing" scandal. In a parting shot, however, he hit  on a central truth.

 

"We made a mistake, they were signing it [affidavits] based upon what they were told, not based upon checking the note file, checking the loan file," Mr. Dimon said. "But the actual information in the affidavit was 99.5% accurate. We're not foreclosing on people who we shouldn't foreclose on."

 

Unfortunately, no one cares about that central truth. Banks bad, borrowers good, end of story.

 

As if this weren't enough of a bad day for banks, Tyra Banks got cross-ways with her New York neighbors over some overly long (and loud) condo renovations. Well, we might as well get all the bad publicity out on the table to feast on on a single day, so folks can eat their fill and move on to something else more fitting of their rapt attention, like whether Maxim Chmerkovskiy actually "dropped" Kirstie Alley last night or whether she broke him like a dry twig. [www.banklawyersblog.com]