U.S. regulators combat conflicts of interest in foreclosure reviews

New York /
Jul.July 18, 2011 02:27 PM

U.S. regulators are barring certain law firms from assisting in eliminating foreclosure abuses, citing potential conflicts of interest, the Wall Street Journal reported.

In one case, the Federal Reserve rejected a GMAC mortgage proposal that Alabama-based attorney Bradley Cummings would assist with an independent, U.S.-mandated review of past home seizures, given that his firm had previously defended GMAC is a foreclosure-related lawsuit.

This is just the latest hurdle in a long-fought battle by U.S. bank regulators to have banks rectify shoddy foreclosure practices.

Instructions issued in April gave banking institutions, including Bank of America, Wells Fargo and Citigroup, until mid-June to draw up plans after widespread problems with bank foreclosure processing operations became public last fall. As per the instructions, the banks were required to hire independent consultants to evaluate all foreclosure proceedings from 2009 and 2010 to establish whether they improperly foreclosed on any homeowners.

Conflicts of interest could undermine the credibility of the evaluations, which are carried out by independent contractors hired by the banks, critics have said.

Documents describing which outside firms will conduct the reviews and how they will be conducted were filed with federal banking regulators last week. Once regulators sign off on plans, the firms handling the look-back assignments will then have 120 days to find errors, the Journal said. [WSJ]


Related Articles

arrow_forward_ios
Philip Falcone and his homes at 142 Crestview Lane in Sagaponack and  22 East 67th Street (Getty, Corcoran, Google Maps)
Foreclosure on Phil Falcone’s homes can move forward
Foreclosure on Phil Falcone’s homes can move forward
(iStock/Illustration by Kevin Rebong for The Real Deal)
Foreclosures and evictions could be halted for rest of 2021
Foreclosures and evictions could be halted for rest of 2021
John Philip Sousa and the Sousa House at 80 Washington Place (Getty, Leslie J. Garfield)
Second foreclosure suit filed against owner of Sousa townhouse in West Village
Second foreclosure suit filed against owner of Sousa townhouse in West Village
Simon and David Reuben with One Thousand Museum (Getty, iStock)
Reuben Brothers seeks to foreclose on Zaha Hadid-designed One Thousand Museum
Reuben Brothers seeks to foreclose on Zaha Hadid-designed One Thousand Museum
Brian Harris of Ladder Capital, Aron Rosenberg or R&B, 28 West 36th Street and 32 West 39th Street. (Ladder, Aron Rosenberg via LinkedIn, Google Maps)
Midtown office buildings stave off foreclosure with refi from Ladder Capital
Midtown office buildings stave off foreclosure with refi from Ladder Capital
John Philip Sousa and the Sousa House at 80 Washington Place (Getty, Google Maps, iStock/Illustration by Alexis Manrodt for The Real Deal)
$25M Sousa townhouse in West Village faces foreclosure
$25M Sousa townhouse in West Village faces foreclosure
Miami-Dade Mayor Daniella Levine Cava (Getty, iStock)
Miami-Dade resumes pre-pandemic evictions after unannounced February break
Miami-Dade resumes pre-pandemic evictions after unannounced February break
Jerome Powell (Getty)
Powell sees new opportunity to reform low-income lending rule
Powell sees new opportunity to reform low-income lending rule
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...