October 18, 2010

Officials in All 50 States Launch Foreclosure Probe

What’s this? Could it be? The very same banks that taxpayers had to rush to save in order to stave off economic disaster could very well be using the same money that the government supplied to them so they could stay afloat to kick people out of their homes without even doing them the due process of filing the legal documents correctly, much less work with those homeowners to keep them in their homes?

No way, couldn’t be.

Seriously, does this surprise anyone at this stage? Banks are so eager to reduce their risk that they would rather cut off their own noses to spite their face to eliminate any and all risk by having money in the housing sector at all, even though that risk could pay off big if they were only willing to work with homeowners to help them stay in their homes. Homeowners who stay in their homes are going to build equity, spend that equity in their homes, and eventually sell those homes at a profit to themselves and the banks who will fund the next buyer who wants that same upgraded home. Getting bargains on foreclosures are great for home buyers, but when a bank is paying a pittance for a home that used to be worth a fortune, it’s no bargain for them. So what’s the deal?

This same nonsensical mentality applies to jobs too – everyone’s so eager to hold the government accountable for the high jobless rate in America – and don’t get me wrong, the government has some strings to pull and are indeed pulling them – which is why we’re seeing increased private sector hiring – but someone, at some point, especially my Republican and Libertarian and other free marketeer friends who trust the private sector more than anyone else – someone has to ask why those businesses just don’t feel like hiring.

After all, they’re seeing great productivity out of the terrified and scared employees they have that are all worried about being laid off, why add more to the payrolls? 9.6% unemployment? Balance sheets don’t care, so why not keep off that hiring frenzy for a while till you get some politicians in office that are willing to shovel you some more cash in exchange for a few measley jobs?

See the pattern? How’s that for “following the money?”

But back to the foreclosure issues at hand:

oint investigation by every state and the District of Columbia could force mortgage companies to settle allegations that they used flawed documents to foreclose on hundreds of thousands of homeowners.

It could take months, at least, for any settlement to be reached. But legal experts say lenders could be forced to accept an independent monitor to ensure they follow state foreclosure laws. The banks could also be subject to financial penalties and be forced to pay some people whose foreclosures were improperly handled.

For banks, “the most efficient way for them to get out from under this is to settle across the board,” said Kathleen Engel, a law professor at Suffolk University in Boston.

Employees of several major lenders have acknowledged in depositions that they signed thousands of foreclosure documents without reading them as required by state laws.

“This is not simply about a glitch in paperwork,” Iowa Attorney General Tom Miller, who’s leading the probe announced Wednesday, said in a statement. “It’s also about some companies violating the law and many people losing their homes.”

Whoa, banks breaking the law in order to alleviate their own risk and reduce the assets on their balance sheets in exchange for cash…cash that they refuse to lend, that even new financial rules don’t even require they keep on hand? That’s unpossible.

Then again, after Republicans derailed efforts last year to force banks into binding legislation to make them settle across the board, maybe now the states will do what Congressional Republicans were too afraid to do: what’s right for the American people.

[ Officials in All 50 States Launch Foreclosure Probe ]
Source: The Washington Post (courtesy of Reader Supported News)

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