Foreclosure Review Consultants Scoring Big From National Bankster Mortgage Settlement; Screwed Over Homeowners: Not So Much

American Banker reports:

• In the wake of the financial crisis, banks mishandled foreclosures on such a scale that regulators stepped in. Led by the Office of the Comptroller of the Currency, they ordered banks to hire independent outsiders to identify homeowners who were wrongly foreclosed on and to provide compensation.
  
  Instead of righting a large-scale wrong, however, the "lookback" reviews have become nearly as controversial as the original servicing blunders. Consumer advocates have blasted the reviews as lacking in independence. They allege that regulators have allowed banks to subvert the program by choosing their reviewers, weighing in on whether borrowers were harmed and even appealing consultants' decisions.
  
  Obscured in the feuding is an issue potentially even more troubling than the questions about the consultants' independence: the cost of running the reviews has spiraled out of all proportion to their potential benefits.
  
  Designed to compensate wronged homeowners, the review programs are almost certain to deliver several times more cash to the consultants overseeing them. Bankruptcy filings by ResCap, the former GMAC mortgage servicer slated to be acquired by Ocwen, state that the company will pay consultant PricewaterhouseCoopers $12,500 to review each of 20,000 loans for a total cost of a quarter-billion dollars. Yet ResCap expects to pay only $35 million to $60 million to harmed homeowners.
  
  PwC employees working on the review are billing between $235 and $630 an hour, depending on seniority. The auditing firm declined to respond to emailed questions on the cost and its procedures.
  
  Other servicers appear to be paying foreclosure reviewers similar fees per file, and the OCC has offered no reason not to use ResCap's filings as a proxy for the costs of its peers. The massive bills being incurred indicate that the banks aren't calling the shots, industry sources argue — the institutions are simply following orders and footing the tab for a program that has gone off the rails
  
  "This is Kafkaesque," says an industry source who requested anonymity to avoid angering the OCC and independent reviewers. "The reviews don't provide any closure [to borrowers], and their cost is going to be orders of magnitude beyond what banks pay out."

For more, see Foreclosure Reviews: Exorbitant for Banks, Gold Mines for Consultants.

In a related story, see: Foreclosure Review Pays Consultant $4 for Each $1 to Homeowners.