FEDERAL RESERVE: DOCUMENTS RELATING TO WIDESPREAD LEGAL VIOLATIONS BY MORTGAGE SERVICING COMPANIES ARE “TRADE SECRETS”; OCC ARGUES THAT THESE DOCUMENTS SHOULD BE WITHHELD FROM MEMBERS OF CONGRESS

April 22, 2013

If this does not spark outrage among the public, nothing will. The information below was provided to us from one of our dedicated followers.

For months, United States Representative Elijah Cummings (D, MD) and Massachusetts Senator Elizabeth Warren have been requesting information from the Fed and the OCC about what took place in the “Independant Foreclosure Review” process. Of the 14 information requests which were made, only one question was answered in full. After a meeting between Cummings, Warren, and the Fed and OCC staff, a 9-page, single-spaced letter was sent to Ben Bernanke (Chairman of the Fed) and Thomas Curry (OCC) by Representative Cummings and Senator Warren which described what transpired. Pertinent sections of the letter:

“Two years ago, your offices (the Fed and OCC) issued a public report announcing that you determined that 14 mortgage servicing companies were engaging in ‘violations of applicable federal and state law’. You found that these abuses have ‘widespread consequences for the national housing market and borrowers’. We have requested information about the process used to conduct this review and the extent to which violations of law were found. At the meeting yesterday, Federal Reserve staff argued that the documents relating to widespread legal violations are the ‘trade secrets’ of mortgage servicing companies. In addition, staff from the Office of Comptroller of the Currency argued that these documents should be withheld from Members of Congress because producing them could be interpreted as a waiver of their authority to prevent disclosure to the public of confidential supervisory bank examination information…. Breaking the law is not a corporate trade secret. As regulators, you identified systematic and widespread abuses two years ago, and concealing important information about these violations limits our ability to fulfill our responsibililty to conduct oversight over the actions of mortgage servicing companies and to develop legislation to protect our constituents from further abuse.”

Several matters are evident. First, mortgage servicing companies are not “banks”. Thus, if this is the position the Fed and the OCC are taking, then the Fed and the OCC are admitting that the “banks” which use the servicng companies (and “supervised” them) were aware of the widespread violations of federal and state law, yet are teaming up with the offending banks to perpetuate their fraudulent conduct.

Second, trade secrets are a form of intellectual property, and any claim for preclusion from disclosure of alleged “trade secrets” has to be ruled upon by a Judge in any litigation if this barrier to discovery is raised. A trade secret is something which an industry has chosen to keep secret for purposes of protecting a legitimate business interest, such as unfair competition. The standard for establishing a trade secret (in a country based on free-market capitalism) is very high.

How do the Fed and the OCC come off arguing that documentation relating to what both the Fed and the OCC have publicly admitted show “widespread violations of federal and state law” by mortgage servicers rise to the level of a “trade secret”? Are the Fed and the OCC really advocating that documents created by mortgage servicing companies which are part of a design to commit legal wrongs on homeowners are “trade secrets” which warrant protection from disclosure and withholding of the information from our elected Representatives and Senators? The letter says it all: the OCC and the Fed are undertaking actions to prevent our elected representatives from implementing legislation to protect us from the fraudulent banks and servicers.

This is beyond outrageous.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

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