As more horrific stories of Wall Street fraudclosure transgressions by too-big-to-fail financial firms against Main Street mortgageholders continue to abound throughout the MSM and blogosphere, the business lead in Saturday's New York Times informs us that presidential advisor Elizabeth Warren's Consumer Financial Protection Bureau "has taken a more aggressive stance in the talks" with our nation's top five banks. According to today's NYT article, our nation's 50 attorneys general submitted a list of demands to Washington, on Thursday night, that will provide sweeping foreclosure reforms which will "drastically alter the foreclosure process and give the government sweeping authority over how mortgage servicers deal with millions of Americans in danger of losing their homes." And, in recent days, we're now being told that the CFPB has put itself at the forefront of this effort.
Mortgage Modification Overhaul Sought by States
By NELSON D. SCHWARTZ and DAVID STREITFELD
New York Times
March 5, 2011
...Under the blueprint, banks would be prohibited from starting foreclosure proceedings while a borrower was actively trying to lower the interest rate or ease other terms of the home loan, a process known as a mortgage modification.
Any borrower who successfully made three payments in a trial modification would be given a permanent modification. When a modification was denied, it would be automatically reviewed by an ombudsman or independent review panel.
The proposed changes, which will be discussed by the attorneys general when they meet in Washington early next week, would compel the banks to treat each borrower in default individually...
We're told in today's Times that Elizabeth Warren's turning the heat on Wall Street up a notch, with the support of Department of Housing and Urban Development, Treasury, the Department of Justice, and the Federal Trade Commission; and that's a beautiful thing, IMHO. The article notes that the attorneys general latest proposal "...represents an expansion of powers for the newly-created Consumer Financial Protection Bureau, which government officials say has taken a more aggressive stance in the talks than some other banking regulators."
The story notes that additional stipulations in the attorneys general demands would require banks to provide the CFPB with "their formulas for determining if and when modifications would proceed, as well as quarterly reports on their internal procedures."
Additionally, training materials for employees at mortgage servicing centers would be reviewed by the CFPB and the attorneys general; and an independent monitor would be appointed to examine compliance as far as settlements are concerned. Banks would also be required to reward their employees for pursuing modifications over foreclosures. Late fees would be reduced; and, a fund would be setup to compensate borrowers victimized by banks misconduct (see my first link in this diary for the banks' latest travesty in this regard).
Michael Calhoun, the president of the Center for Responsible Lending is quoted at the end of the article telling us ...
“If these changes are enforceable and enforced, it will make a significant difference”...But he said it would require the banks to make radical changes: “This is very hands-on, time-intensive, one-off stuff.”
The Times article cautions that this is just the beginning of a many-months-long "negotiation" with Wall Street, and it contains the usual rightwing, status quo memes from the likes of NJ Republican Congressman Scott Garrett, who states, “This is another attempt by the Obama administration to circumvent the rule of law [Garret complains earlier in the article that Warren hasn't been appointed by Congress to run the CFPB] and unilaterally implement its failed housing agenda at the expense of responsible homeowners.”
The last paragraph provides us with the biggest reality-check of all, a cautionary quote from Walter Hackett, a former banker and managing attorney at Inland Counties Legal Services in Riverside, Calif., who states, “For 20 years I’ve watched bankers try to find ways around the rules,” he said. “They are adept.”
Frankly, it's nice to hear that Ms. Warren is leading the charge for mortgage reform. However...
The other side of this mortgage industry revamping reality paints a different picture, altogether.
The truth is, as I noted in my diary, "Endgame," on February 4th, our government has proposed what is, in effect, the biggest Wall Street bailout of all: the comprehensive, taxpayer-backstopped privatization of our country's mortgage industry, resplendent with massive, stealthy and ongoing backstops and bailouts for our nation's TBTF's, essentially morphing their mortgage subidiaries into government-sponsored entities.
Another inconvenient truth here is that the CFPB is promoting the negotiation of a paltry $20 billion settlement with Wall Street, a veritable wristslap as it were, to cover a decade's worth of mortgage fraud activities perpetrated by Wall Street upon Main Street, as I noted this in my diary from February 24th: "Yves Smith: $20B 'Mortgage Fraud Whitewash.'"
Smith, who's probably been covering this story more closely than just about anyone else, also referred to these ongoing negotiations as "bizarre," in a post from yesterday: "The Bizarre Mortgage 'Settlement' Negotiations."
So, while ongoing horror tales of TBTF behavior continue to fill the MSM and the blogosphere with harsh stories of Wall Street greed-still-going-wild. And,
while other major mortgage lenders outright lie to us about supposed foreclosure moratoriums, not to even mention the fact that many of those on Wall Street got away with fraud and outright pillaging on a historical scale with merely a wristslap, it's nice to see someone in Washington actually walking the walk, and not just talking the talk, on behalf of Main Street in this weekend's MSM.
Readers should savor this moment because, regrettably, these instances are too few and far between these days.
You go, Ms. Warren! Kick some ass! We're all here cheering you on.
Updated by bobswern at Sat Mar 5, 2011, 04:25:58 PM
From Pluto in the comments...
Someone has to say it...........
GOP Budget Plan Would Cut CFPB Funding Nearly In Half
WASHINGTON -- A new federal budget proposal from House Republicans would dramatically restrict the budget of the new Consumer Financial Protection Bureau during its first year of operation.
[UPDATE: An amendment introduced by Rep. Rush Holt (D-N.J.) to restore $63 million in funding to the CFPB failed on Thursday in a 163-265 vote.]
No House Republicans voted for the Wall Street reform bill that created the CFPB, which is currently being set up by consumer watchdog Elizabeth Warren. Several House Republicans have suggested cutting the agency's budget, however, as a method of restricting its capacity to regulate.
The language included in the House GOP's budget proposal for 2011 would restrict the CFPB's annual budget to $80 million-- a major cut from the $143 million the agency expects to spend as it hires staff and implements new systems to get off the ground.
The Republican attack on the CFPB's funding would only apply to this year, but would make launching the new agency very difficult, and send a very aggressive signal about Congress' intent to follow through on the bill it passed in July. Regulations cannot be enforced if regulators do not have the budget to hire staff.
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Just speaking from a practical reality perspective -- why in the world would Our Corporate Overlords allow the CFPB to exist? They would always destroy anything of this nature that is a threat to the Financial Sector.
Isn't it sort of insane to believe otherwise?