September 16, 2011

John Walsh
Acting Comptroller of the Currency
Administrator of National Banks
Washington DC 20219

Re:  Residential Mortgage Servicers Consent Orders

Dear Mr. Walsh:

The National Association of Consumer Bankruptcy Attorneys (NACBA)[1]  has been following with interest the OCC’s progress in overseeing the implementation of your consent orders with the major residential mortgage servicers entered into in April 2011.  We wish to convey our concerns about the enforcement of those orders.

Our members have had the unfortunate role of representing borrowers in their attempts to obtain loan modifications and to avoid foreclosures by filing Chapter 13 bankruptcy cases. As a result of the commendable work of your agency and other federal agencies in reviewing the foreclosure processes utilized by the major servicers, you have seen the financial devastation brought upon innocent and unwitting homeowners as a result of the servicers’ systematic and institutionalized abuses of time-honored legal processes.

Our members, however, have an even closer perspective on this grievous problem since they meet on a daily basis with these despairing homeowners.  Many of them are middle-class American workers who have been hit with the double-whammy of fraudulent foreclosure processes and intermittent unemployment.  They are wondering when their government will step up and defend them against the outrages visited upon them by their servicers.

You know the general story lines: homeowners being accused of not providing paperwork that was provided numerous times; being offered unaffordable modifications based on grossly miscalculated income; not being offered any modification – for no reason at all or for a reason that is not a permissible reason under HAMP regulations; being denied even an evaluation for a HAMP modification.  It goes on and on.  And, since HAMP regulations remain generally unenforced by the Administration, consumer debtors have no effective recourse when those regulations are simply ignored by the untrained and oblivious modification staff of the servicers.

Servicers add insult to injury when their own bankruptcy attorneys file motions for relief from the bankruptcy stay in order to proceed with foreclosure, despite an ongoing loan modification evaluation.  The servicers’ bankruptcy attorneys cheerfully deny the existence of any loan modification evaluation process.  And then, a few months after a permanent loan modification is granted, they unabashedly file a new motion for relief from the stay to foreclose because the borrower is not paying the original monthly payments.  It’s outrageous, pure and simple.  And it costs our members tens of thousands of hours of their professional time, the bulk of which is not compensated in any way.

Our members are also on the front line of the robo-signer problem.  As you know, many of the robo-signed documents are filed in bankruptcy cases.  While it is the task of our members to contest the validity of these fraudulent documents, their sheer numbers overwhelm small law offices, requiring additional staff to review these fraudulent documents.  The servicers rely on these vast quantities of fraudulent documents to prevent the individual bankruptcy courts from developing an effective nationwide system for dealing with them.

While the consent orders are encouraging – as we hope the action plans that are currently under consideration will be – the problem will lie in their enforcement. The OCC can facilitate the enforcement of the orders by incorporating the roles of consumer bankruptcy attorneys and bankruptcy judges in the action plans, with regard to borrowers who are bankruptcy debtors.  For those borrowers, bankruptcy judges are the only “on the ground” enforcement officers.  As consumer bankruptcy attorneys find violations of the consent orders/action plans, these violations could be brought before the bankruptcy judge for adjudication.  The action plans should provide for specified attorneys fees to be paid to consumer bankruptcy attorneys if the servicer violates the order/action plan.  Action plans should provide for mandatory damages (including attorneys’ fees) and sanctions to be imposed by a bankruptcy judge for violations in connection with a borrower who is a bankruptcy debtor.

In addition, it should be obvious that for servicer violations to even be identified, the action plans, themselves, must be made public. If the action plans are not made public, it would be impossible to know if there are violations, much less enforce the provisions or even report violations.  Absent adequate public disclosure, the  plans and the consent orders will lose all meaning and become one more set of documents just filed away for posterity.

In conclusion, we commend you for your progress with this important and difficult problem that affects the daily lives of so millions of Americans.  We ask that you move forward confidently to facilitate the effective implementation of the remedies to which these Americans should be entitled, and among them: 1) provide in the action plans enforcement by bankruptcy judges; 2) provide for mandatory damages to be imposed by bankruptcy judges; and 3) officially publish  all the action plans.

If you have questions or need additional information, please contact NACBA member Norma Hammes by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Sincerely,


WILLIAM E. BREWER, JR.
President