Pre-recession banks turned a blind eye to problems with the mortgages they handed out, bundled, sold and securitized. When that bubble burst, these same banks put the foreclosure process on auto-pilot, allowing anyone with a pulse to sign legal documents. So who better to review all those foreclosures for errors than the institutions that didn’t care in the first place?

According to a new DealBook report, in an effort to expedite the distribution of billions of dollars in relief to people who were wronged by a faulty foreclosure process, the Office of the Comptroller of the Currency has done away with the requirement of an independent, third-party review.

Writes DealBook:

To accelerate the payments, the comptroller’s office decided to cut out the middlemen, the consultants, from the reviews. In a conference call last week, the government outlined a plan to use the lenders instead, according to people with direct knowledge of the discussion. Banks will now have to assess each loan for potential errors, which will help determine the size of the payments to homeowners.

The foreclosure review process has already been heavily criticized for the long delays in getting the promised pay-outs to homeowners who were the victims of foreclosures that were improperly handled by banks that hired so-called robo-signers to rubber-stamp all foreclosure-related documents without even understanding what they were signing.

The hope had been for initial payments to go out in 2012, but it looks like the earliest anyone will see a dollar is this spring.

There is also the cost issue. These independent reviewers has billed for $2 billion in fees over the course of 14 months, but only reviewed a small fraction of the 500,000 complaints filed by homeowners.

The independence of the review process had also been called into question. In December, ProPublica revealed that Bank of America had been providing reviewers with “cheat sheets” that already had responses written into the form.

But that is no longer an issue, as the burden of doing these reviews has been put back on the banks. These institutions will now go through each foreclosure to determine if an error had been made. Military personnel, a number of whom were illegally foreclosed on while serving overseas, will be the first to get reviewed.

After reviewing a foreclosure, the banks will determine whether or not an error has been made and how much should be paid in restitution to the homeowner.

Taking this process out of the hands of independent reviewers is a mistake, say some advocates.

“The whole process has been a slap in the face to homeowners and a slap on the wrist to banks,” an organizer with the community group Lynn United for Change tells DealBook. “The latest development shows how there has been no accountability.”

It’s also worth pointing out that some of the folks involved in banks’ internal review process may not be the best people for the job. For example, the person running Chase’s foreclosure review department is a former Countrywide COO who did nothing while her then-employer instituted a program known as “The Hustle,” which removed all underwriting roadblocks to mortgage approval in an attempt to cash in by selling as many crappy mortgages to Fannie Mae and Freddie Mac as possible.

However, the Office of the Comptroller of the Currency says that while the independent reviewers are no longer in the picture, the OCC will be spot-checking banks to guard against any malfeasance.

“Regulators will verify and test the work of servicers to slot borrowers into broad categories and then regulators will determine the amount of payment for each category,” explained the deputy comptroller in charge of supervising large banks.

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