Treasury Admits It Hasn't Fined Banks For Failing To Comply With Mortgage Modification Program (VIDEO)

A top Treasury department official said Thursday that the government has still not imposed any fines on banks that do not comply with the Obama administration's mortgage modification program.

In testimony before a House Financial Services subcommittee, Phyllis Caldwell, chief of Treasury's Homeownership Preservation Office, said her department has pursued "non-monetary remedies" but has not actually imposed any fines on banks for not complying with the administration's flagship $50 billion foreclosure prevention program.

Even in the midst of a growing controversy over allegedly fraudulent foreclosure paperwork, Treasury has not imposed any penalties on banks.

By many estimates, the Home Affordable Modification Program, which was launched last year, has been a failure. Although about 1.5 million borrowers were encouraged to sign up during its first year, 40 percent of those were kicked out of the program after initiating "trial" modifications, HuffPost's Shahien Nasiripour and Arthur Delaney reported. The program was intended to help up to 4 million homeowners avoid foreclosure.

In his latest report to Congress, the special inspector general for TARP Neil Barofsky said the mortgage-modification program can actually cause borrowers to go into foreclosure, due to extra fees that can accumulate on modified loans. The Government Accountability Office reported in March and in June not only that Treasury has not levied any fines on mortgage companies, but also that it hasn't even finalized guidelines for doing so.

After bank officials admitted that they had employed people who approved foreclosure documents without reading them, big banks including JPMorgan Chase and Bank of America last month temporarily halted their foreclosures. A Federal task force is investigating whether there has been criminal activity in the mortgage industry, and Bank of America faces a Federal racketeering lawsuit over its allegedly shoddy paperwork.

Still, Treasury has not yet punished these banks in any significant way. "To date we have not gone back to take back incentives that have already been paid, but we have pursued many of the non-monetary remedies, including further actions and evaluations, and re-evaluations," Caldwell told Rep. Maxine Waters (D-Calif.), chair of the subcommittee on Housing and Community Opportunity, after Waters repeatedly asked her if she had "levied any penalties or sanctions."

Caldwell emphasized that her department has required mortgage servicers, the companies that collect mortgage payments, to alter the way they carry out the HAMP process. But Waters was not impressed.

"You've required them to do some things. You've asked them to change some of their procedures, et cetera," Waters said. "There have been no monetary penalties, from what I'm hearing from you."

Lawmakers criticized the mortgage-modification program throughout the hearing, with none of them coming to Treasury's defense.

WATCH below:

Comments

[RightToCancel]

04:30 PM on 12/08/2010

TJ "The Central Bank is an institution of the most deadly hostility existing against the principles and form of our Constitution if the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."1 The most rewarding things about this epic battle that is the foreclosure fight is meeting homeowners and other advocates who are standing up and fighting for themselves and fighting for the heart and soul of our courthouses. http://www.righttocancel.com/?id=todd
We have only seen the tip of the mortgage crisis. The scariest part currently of this crisis is that people are losing hope, The common consensus is "why bother...the bank doesn't care...why should I? I will just go rent." The American dream has gone from aspiring to own your own home to just hoping to keep your home. http://www.righttocancel.com/?id=todd
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[RightToCancel]

04:29 PM on 12/08/2010

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How is this Legal?
commercial law which is uniform worldwide and governs commercial transactions and contracts:
UCC 3-104(e) An instrument is a "note" if it is a promise and is a "draft" if it is an order. If an instrument falls within the definition of both "note" and "draft," a person entitled to enforce the instrument may treat it.

UCC 9-102(65) "Promissory note" means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds.

What is the administrative procedure?
By using, The Administrative Procedures Act and evidences the banks' default. When you complete the administrative processes using our forms you will be awarded with a judgment and claim/lien against the bank which is recorded on a UCC-1 Financing Statement.

[Damian-fonseca]

07:17 AM on 12/01/2010

I guess we will see some banks getting fines now. Treasury was put on the spot, now it needs to respond.

[plumbergirl]

11:55 AM on 11/23/2010

"no monetary penalties." Maybe if the people being screwed by the banks should just get free shotguns to receive the fair treatment they deserve.

[Siebenstein]

07:08 AM on 11/23/2010

Treasury Admits It Hasn't Fined Banks For Failing To Comply With Mortgage Modification Program

Now isn't that a total surprise?

[Peatbog]

12:21 AM on 11/23/2010

Laughable... "In the first year, ..." "In the first year..." How many years does she think people have to get their mortgages fixed? Answers like those simply show a company man/woman spouting the company line, in this case the Treasury line. It sounds like Treasury is as close to the banks as MMS was to the oil companies in Denver.

[tinman1967]

02:44 PM on 11/22/2010

Lenders shouldn't have to modify mortgages. I sit on a couple bank boards. We never had many home mortgages but on the ones we had if any fell behind we'd hound them morning, noon and night.
One last thing we made sure of...that their FICO score was less than room temperature.

[Peatbog]

12:23 AM on 11/23/2010

Maybe your bank didn't indulge itself in the shell game. If the mortgage was sold three times before its ink was dry, you wouldn't be so concerned.

[Voting citizen]

01:14 PM on 11/21/2010

I wonder how many people who are part of this scam have lost their homes. If any one of the thieves lost there homes there would be change. Fine someone??? Ok think of this...Bush is a free man. That should help you understand what will happen to the thieves of the economy, housing and freedom. nothing.

[GoldsteinD]

10:03 PM on 11/20/2010

The banks are broke. Their in league with the govt and have you all believing that the stimulus worked and that banks are now making a profit. It's a lie that's working, making you all feel safe with your nest eggs.

sleep on, lambs

[AZreb]

09:42 PM on 11/20/2010

Geithner needs to be sent packing and someone who is knowledgable put into his position. He has done little to stop the fraudulent practices of banks and lenders, even when proof of wrongdoing is put in front of him.

When I look at some of the cabinet members, I have to ask "Is this the best there is?" And the answer too often is "NO".

[Ronald Sloan]

01:27 PM on 11/21/2010

Geithner needs to be given free room and board
somewhere in the penal system.

[Dana Walker]

01:11 PM on 11/20/2010

The Wall Street banks — who were already enjoying record profits whilst everyone else was on their asses because of them — just received yet another windfall! Like the storied magicians of old, the Federal Reserve has just created $600 billion out of thin air! There was nothing — then there was $600 billion! Just like that!

This is like alchemy taken to a cosmic level!

Then, after creating $600 billion out of thin air, they just gave it to Goldman Sachs!

Wow, cool! How did they do that? Can I get one of those?

This ‘gift’ was given to Goldman Sachs by the head of the New York Fed, William Dudley. Before he was head of the New York Fed, William Dudley worked for Goldman Sachs. Goldman Sachs was Barack Obama’s largest campaign contributor. Goldman Sachs was George Bush’s largest campaign contributor. Mr. Dudley’s predecessor at the New York Fed was Timothy Geithner. Timothy Geithner is now Obama’s treasury secretary. Small world, eh?

To those of you who think the Democrats are going to save us: About 85% of the Democratic Party works for the thieves. They are in on it. To those of you who think the Republicans are going to save us: About 99.9% of the Republican Party work for the thieves. They are also in on it, only more so.

For the slime beneath the headlines go to http://www.rollingstone.com/politics/news/17390/232611?RS_show_page=3 and prepare to be outraged.

[massimo1]

12:38 PM on 11/20/2010

In other words, business as usual. Maybe instead of cutting spending, the government should start collecting monies they are owed.

[EpicCatman]

10:33 AM on 11/20/2010

You can't FINE YOUR BOSS, can you?

These banksters have us all by the B@LL$, even the government can't do anything about it.

[Shaun Hensley]

04:13 AM on 11/21/2010

I don't even think that Phyllis said 'we haven't fined anybody' I think she said 'we haven't recovered money we've already given them'.

[hamsteronwheel]

06:34 AM on 11/20/2010

we are all hamsters on neocon "financially engineered" wheels...

geithner and goldman need to be INVESTIGATED, PROSECUTED, and CLAWED BACK for financial terrorism along with blankfein, fuld, rubin, summers, bernanke, greenspam, dimon, speyer, stephen friedman, prince, weill, immelt, chais, merkin, picower... They all KNEW the public would forget their crimes due to the sunami of cascading information that no common person can process...

after all they finance the major media outlets.

most are NY Fed alumni.

their unmitigated GREED destroyed middle class mortgages, 401Ks, health care, schools, and the middle class.

This was the greatest REDISTRIBUTION of wealth in history; UPWARD to the wealthiest few.

by appointing geither, summers, having rubin in a key advisory role, minions of goldman sachs throughout his administration, and reconfirming bernanke, Obama is complicit and has facilitated this pillaging of America.

if he is to be remembered as anything other than a wall street facilitator, if he is to live up to his campaign rhetoric, he has to make Major, Bold, Progressive changes that CLAMP DOWN on wall street, private equity, hedge funds, and invest in the middle class!

[Veri]

06:27 AM on 11/20/2010

Treasury may well as just said, "We work for the bankers."

Do we really need anymore explanation about the repeated failures on all levels of government to reign in the excesses and criminality of the banking system. And Finance as a whole?

No.