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OCC Follies: Troubled Borrowers Get Shafted Yet Again

Rust Consulting underpays harmed borrowers in the latest Independent Foreclosure Review 'mistake'

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But, in effect, the checks bounced. And after the incident, Rust lost significant credibility with the regulators, officials said.

More recently, homeowners have complained about clerical errors at Rust, problems like checks sent to the wrong addresses or issued to deceased borrowers.

Norma Gammon, 54, said she thought things could not get much worse after her home in Evansville, Ind., was sold at foreclosure auction in June. But then she started dealing with Rust. After contacting Rust at least six times to update her address, Ms. Gammon said, she learned that the firm had sent the check to her foreclosed property. To receive another payment, Ms. Gammon has to fill out a new form. But Rust says the form has been sent three times, apparently to the wrong address.

“It’s so frustrating that I just want to cry,” she said.

Yves here. It’s important to stress that the perception of how good or bad service is is not a function of the error rate, but of what the organization does when it recognizes it goofed. People are forgiving if the company remedies the problem quickly and apologizes, and if the mistake is significant, provides some sort of concession as a way of making amends. Rust is just digging its hole deeper by going into denial and failing to fix its procedures. But of course, that assumes they care.

The only upside to this seemingly unending saga of stuff-ups is that it keeps the IFR fiasco in the press, which in turn reminds Congressmen and the public of how dreadful the OCC is. The best outcome would be to eliminate the agency or have its role curtailed severely. To help that along, if you’ve been shortchanged by the IFR process, let your Congressmen and local media know. The more heat, the better.


Yves Smith is the founder of Naked Capitalism and the author of "ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism."