The interesting question is whether the regulators are as dumb as that paragraph indicates, or merely playing dumb on the no doubt accurate assumption that the vast majority of readers won’t detect what is amiss. As we said we suspected earlier, and this text confirms, the authorities made no independent verification of whether the charges were warranted; their review merely confirmed that the bank’s own records did show borrowers to be in arrears. There was no effort to check servicer records against borrower payments (an issue in a case we highlighted yesterday which led a bankruptcy court judge to sanction both Lender Processing Services and the foreclosure law firm) or whether the charges resulted from improper deduction of fees first (by contract and Federal law, borrower payments are to be credited to principal and interest first, fees second), padded or double charged fees, force placed insurance, and other abuses that can greatly increase the amount a borrower allegedly owes.
Similarly, the authorities are playing dumb as far as chain of title issues are concerned, and are accepting the American Securitization Forum party line that possessing the note is sufficient to initiate a foreclosure...
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