Sam Gendusa January 24, 2013

Writing for Forbes Online, Daniel Fisher says that the Independent Foreclosure Review was a “snipe hunt,” and that now that the $8.5 billion settlement has brought it to an end, big banks and the government can get back to doing what they do best.

Mr. Fisher reasons that it never made sense for banks to foreclose fraudulently because they actually lose money on each foreclosure. Rather, he sees the government’s recent settlement as their way of acknowledging that no (or very little) actual fraud took place without having to come out and say they wasted a bunch of taxpayer money on a wild goose chase.

According Mr. Fisher’s piece, he doesn’t believe the banks were or are guilty of wrongdoing in the real estate collapse or subsequent mortgage scandal. “This so-called ‘predatory lending,’ he states, “doesn’t make any economic sense, unless you’re willing to buy the theory that the fees flowing from an ultimately unprofitable loan were enough to induce bankers to destroy their own institutions in search of a year-end bonus.” While he admits this is a possibility, he finds it unlikely.

With banks having already spent $1.5 billion to comply with the Independent Foreclosure Review, the Review costing the Office of the Comptroller of the Currency roughly $5,000 per case, and the apparent inability to turn up any significant cases of fraudulent mortgages/foreclosures, the settlement seems to have been quite agreeable to both sides, if you follow Mr. Fisher’s reasoning.

What does the Independent Foreclosure Review look like to you? Do you agree with the interpretation above, or do you have a different view?

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