Our friends at Naked Capitalism unveiled some ugly information about the Comptroller of the Currency’s role in perpetuating modification failures today.
It seems that one of the reasons for the shortfall in information gathered by the attorneys general working to address problems in the mortgage servicing industry is that the Comptroller of the Currency forbade national banks to disclose loss mitigation data to the states.
Subprime servicers were willing to hand over data. But national banks were ordered not to provide data on loss mitigation to investigators. It gets worse. Kaufman notes that in Maryland, loan modifications often led to homeowners paying a higher monthly amount after getting their loan modified. When a homeowner asked for help, they got a higher bill. In essence, this is the financial equivalent of having the fire department try to put out a blazing inferno with gasoline.
We’ve long known that the many huge for-profit corporations in this game had acted against the interests of consumers and that government at virtually every level had either failed to act or taken inadequate action; this disclosure appears to take governmental culpability to a whole new level, putting at least one official firmly on the side of preventing fallout by keeping the truth under wraps.