We've got thick skins here at American Banker and BankThink. We can take it when bloggers mock our stories.
So we didn't wince when we read Foreclosureblues' take on AB's Wednesday afternoon scoop about regulators planning enforcement actions (and likely fines) against the big mortgage servicers.
The general drift of the blog post (sarcastically titled "Federal Regulators to Bring Enforcement Actions Against Banks… May Get Rid of Hot Towels in Washroom") is that the servicers are likely getting a pass, and that our coverage was insufficiently outraged by this reality. (We should warn you before you click through: the blog post contains language that wouldn't be appropriate to reprint in a family publication, and a passage in which the blogger fantasizes about physically assaulting one of the story's sources in a parking lot.)
Among other things, AB's story reported that the FDIC and other agencies were "pushing to include an agreement to offer enhanced, streamlined loan modifications to troubled borrowers in exchange for a clearer path to foreclosure if redefault occurs. It remained unclear, however, whether regulators would take that step."
That was the first passage to get Foreclosureblues' dander up.
"Okay, just wait a damn minute here," the post says. "When I started writing this article I thought I was going to be telling people that finally… finally… after being allowed to abuse literally millions of American homeowners in the worst ways and at the worst time imaginable, finally the federal banking regulators were going take steps to punish servicers for their crimes against homeowners, investors, and our society as a whole. But, that's not what's happening here at all is it. [sic]"
Forclosureblues (whose editor apparently makes his living advising homeowners facing foreclosure and their attorneys) found it offensive that regulators were even negotiating with the servicers, using that clearer path to foreclosure on redefaulted loans as a bargaining chip. "How about the servicers offer 'enhanced, streamlined modifications to troubled borrowers' just because it's the right thing to do?" the blog says.
An obvious response is "don't shoot the messenger" (or perhaps in this case, "please don't beat up the messenger in a parking lot"). We're telling readers how it's actually going down in Washington, like it or not. We also might point out that, as the story said, the enforcement actions aren't set yet. They could end up being tough, or not.
A former banker quoted in AB's story lamented that the industry failed to take remedial steps on its own before regulators stepped in. Again, Foreclosureblues is incredulous, and launches into a tirade that seemed to be directed both at the source and at us for quoting him: "What kind of distorted perspective looks at what the servicers have done her [sic] … these last three years… and says… gee, it would have been better if they wouldn't have done those things. … Are you aware that people have committed suicide because of that [sic] these servicers have done to them? Marriages have ended. Entire communities destroyed. Damage to children that is inestimable."
Apparently, this is Foreclosureblues' first foray to AmericanBanker.com, because he seems to have missed when we reported uncomfortable truths about the mortgage industry here, here, here and, oh, here. Of course there were — and are — real-world implications, often tragic. But life is more complicated than "heroes vs. villains," and our readers wouldn't benefit from such a simplistic narrative.
What do you think the regulatory orders are likely to tell servicers to do? What should the orders demand? Know any good bodyguards? Leave a comment on this post by using the form below.
Editor's note: Turns out that Foreclosureblues isn't the originator of the blog post we were responding to. It was Martin Andelman of Mandelman Matters. Foreclosureblues apparently copied it to their site. You can find the original post, including what sounds like a suggestion that AB staff members should be waterboarded, right here.