Bank oversight office failed to spot foreclosure fraud, Treasury inspector general says

By Brady Dennis, Washington Post
Monday, June 4th, 2012

The Office of the Comptroller of the Currency failed to spot widespread problems in the foreclosure practices of major banks between 2008 and 2010 because the agency’s examiners underestimated the mounting risks and were given outdated guidance that did not address how the industry had changed, according to a report issued Friday by the Treasury Department’s inspector general.

As foreclosures skyrocketed across the country in the wake of the financial crisis, banks routinely filed flawed and fraudulent legal documents in a rush to keep up with the wave of defaults. But officials at the Office of the Comptroller of the Currency largely missed the fact that the mortgage servicers were cutting legal corners on such a large scale, according to Friday’s report. 

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