We’re talking about massive, massive fraud. And this is what the state Attorneys General and the federal regulators gave up, in exchange for their non-investigatory investigation.

The Consumer Financial Protection Bureau has begun its rulemaking process for mortgage servicing, starting with a description of the rules they will consider. The formal proposal of servicing rules will come this summer, and the final rules will get promulgated in January 2013.

CREDO, the online progressive organizing group, alleges in a new email to supporters that the Justice Department has not delivered the promised (and paltry) number of 55 staff members to the RMBS working group, the task force co-chaired by New York Attorney General Eric Schneiderman to investigate the mortgage securitization practices of the leading banks. No investigators means not investigations, and time is running out.

I read a rough transcript of this C-SPAN interview with HUD Secretary Shaun Donovan, and there isn’t a whole lot there that’s all that different from the PR pronouncements he’s made in the past. So this won’t be extensive. I just have a few comments…

We’re learning that the foreclosure fraud settlement is leading to a jump in foreclosures, as the banks feel less constrained by their document problems, secure in the knowledge that they can just buy their way out of them. And the other part of this is that, despite the settlement, the banks have not stopped the behavior that required the settlement in the first place. And here’s some more evidence of that, from yet another example of the broken servicing market.

A federal judge in DC swiftly approved the foreclosure fraud settlement yesterday. Actually four of the consent orders with the five largest mortgage servicers were approved Wednesday, but we only learned publicly of the approval of all five settlements yesterday.

Some investor groups had talked about challenging the terms of the settlement, but this approval happened so quickly, and without even so much as a hearing, that they had no time to react. This is the very definition of a rubber stamp.

Over the next several weeks, these bank accountability leaders told me they will step up their direct efforts against the banks and also the Administration.

In the Bank of America/Bank of New York Mellon settlement with investors on mortgage-backed securities deficiencies, it appeared the banks were getting the upper hand with a friendly state judge, and some of the objections to the settlement from outside investors were struck down. But that all ended yesterday, when a US District Court judge allowed one lawsuit against Mellon to go forward in federal court, opening a new path.

We’ve seen a few of stories, including this one in the NYT, about a surge of investors picking up foreclosed homes cheap and converting them into rental properties. Foreclosed or abandoned homes are always fixer-upper candidates, and investors have been scooping them up for decades. The difference here is that the investor groups are bigger and more institutional. Will this help or hurt the housing market?

Here’s an almost completely unremarked-upon side effect of the foreclosure fraud settlement: the tax implications. If you are one of the lucky few eligible to receive a principal reduction from the settlement, when the banks aren’t paying off their penalty bulldozing homes and waiving deficiency judgments, you have to reckon with this: because of the expiration of a Congressional law, every dollar you receive in principal reduction would be viewed for tax purposes as income, and thusly taxed. Most of the people needing a principal reduction are in dire financial straits; they wouldn’t need a write-down otherwise. So now, we’re going to hit them with a big tax bill that they can pay for with money they don’t have.