White House, Warren Back State AG Investigation of Foreclosure Fraud
The White House supports the 40-state investigation into fraudulent foreclosure practices, though they stopped short of endorsing a nationwide moratorium.
It’s worth noting that the chief executive could not accomplish such a moratorium by himself. States are undergoing their own moratorium attempts. Independent regulators like the FDIC or the OCC could potentially enact moratoria on individual servicers. It’s also possible that the Financial Stability Oversight Council could put a moratorium together if they felt that continued fraudulent foreclosures presented a systemic risk. And Congress may be able to mandate a freeze on GSE-backed mortgages, which is most of them at this point. But it’s unclear whether Obama could sign something to prevent foreclosures across the country. There’s no doubt that Administration support would help the resolve of the regulators involved, but as I said yesterday the wheels have come off of this regardless of the White House’s preferences.
That said, I will take the support for the state AG investigation:
“We’re supportive of getting to the bottom of the process and insuring that these banks are following the legal process for making these decisions,” White House Press Secretary Robert Gibbs told reporters. “There are a series of unintended consequences to a broader moratorium.”
Elizabeth Warren, Assistant to the President and counselor to the Treasury Secretary on the Consumer Financial Protection Bureau, just addressed this in a live White House chat. She started by saying “If there was anyone who thought, well, not sure we need a consumer agency, just take a look at today’s headlines.” She acknowledged that she was aware of some minor problems with affidavits and notarizations and servicer practices as much as three years ago, and if the CFPB were in place back when these problems were small and far apart, “this agency would have been able to head them off right then.”
She added, “This problem is big and it is serious… we know that the issuers themselves are trying to get this problem solved. Right now the role is to do what we can, not just this agency which is in its infancy but the federal government generally, to gather information to try to get ahead of understanding what is going on.” That’s not much, but basically similar to an endorsement of the state AG investigation.
One thing I’d add – that investigation should be criminal and not just civil. [updates after the jump]
UPDATE: Bill Black had a host of suggestions for what the President could do, none of which included a moratorium, but all of which were solid ideas.
UPDATE II: Warren basically said the same thing at the end of this Bloomberg interview today.
White House, Warren Back State AG Investigation of Foreclosure Fraud
The White House supports the 40-state investigation into fraudulent foreclosure practices, though they stopped short of endorsing a nationwide moratorium.
It’s worth noting that the chief executive could not accomplish such a moratorium by himself. States are undergoing their own moratorium attempts. Independent regulators like the FDIC or the OCC could potentially enact moratoria on individual servicers. It’s also possible that the Financial Stability Oversight Council could put a moratorium together if they felt that continued fraudulent foreclosures presented a systemic risk. And Congress may be able to mandate a freeze on GSE-backed mortgages, which is most of them at this point. But it’s unclear whether Obama could sign something to prevent foreclosures across the country. There’s no doubt that Administration support would help the resolve of the regulators involved, but as I said yesterday the wheels have come off of this regardless of the White House’s preferences.
That said, I will take the support for the state AG investigation:
“We’re supportive of getting to the bottom of the process and insuring that these banks are following the legal process for making these decisions,” White House Press Secretary Robert Gibbs told reporters. “There are a series of unintended consequences to a broader moratorium.”
Elizabeth Warren, Assistant to the President and counselor to the Treasury Secretary on the Consumer Financial Protection Bureau, just addressed this in a live White House chat. She started by saying “If there was anyone who thought, well, not sure we need a consumer agency, just take a look at today’s headlines.” She acknowledged that she was aware of some minor problems with affidavits and notarizations and servicer practices as much as three years ago, and if the CFPB were in place back when these problems were small and far apart, “this agency would have been able to head them off right then.”
She added, “This problem is big and it is serious… we know that the issuers themselves are trying to get this problem solved. Right now the role is to do what we can, not just this agency which is in its infancy but the federal government generally, to gather information to try to get ahead of understanding what is going on.” That’s not much, but basically similar to an endorsement of the state AG investigation.
One thing I’d add – that investigation should be criminal and not just civil.
UPDATE: Bill Black had a host of suggestions for what the President could do, none of which included a moratorium, but all of which were solid ideas.
UPDATE II: Warren basically said the same thing at the end of this Bloomberg interview today.
