Ok, continuing the series on the mortgage foreclosure crisis here. For background on the legal side of the problem see Part 1 and for a humorous look by Jon Stewart at the crisis see Part 2.
The banks are claiming that the problems are only paperwork glitches, that all the people being foreclosed on are in default and owe serious money, and that foreclosures will resume soon. Kind of a “nothing to see here, move along” response. This pitch is getting echoed by politicians, the Wall Street Journal (I don’t link to pay sites), and, of course, the banks. The White House seems to be falling into line with their bosses, the banks, too. From the New York Times (free registration may be required):
The industry has argued in response that problems should be addressed without halting all foreclosures, because a moratorium would damage the economy. “It must be recognized that the mortgage market, investors and the health of the economy are all interrelated,” Tim Ryan, president of the Securities Industry and Financial Markets Association, said Monday.
The White House shares those concerns, and it has tried to defuse the issue by arguing that problems can be addressed without imposing a moratorium.
Administration officials argue in part that the problems that have emerged in recent weeks do not change the fact that lenders are seeking to foreclose on people who borrowed and then failed to repay. Most of the identified problems are best described as technicalities, not miscarriages of justice.
But we also know it’s patently false. There are clear cases of erroneous foreclosures including, but not limited to these reported in the same Times article:
Advocates for homeowners, however, say that the pattern of sloppiness allows and encourages more serious abuses. They point to a growing number of documented cases in which lenders mistakenly seized homes.
Bank of America apologized last month for foreclosing on a home in Fort Lauderdale, Fla. The homeowner didn’t even have a mortgage. The bank had failed to notice that the previous owner had repaid the mortgage loan.
Last year the company’s contractors entered the home of a Pittsburgh woman, changed the locks, cut off the utilities and seized her pet parrot. The bank later acknowledged that the woman had not missed any mortgage payments.
Dozens of people have sued lenders charging that their homes were foreclosed even after the lender agreed to a loan modification or repayment plan.
I just don’t accept that foreclosing and seizing (really stealing) a house that DID NOT HAVE A MORTGAGE is more than a “paperwork glitch”. There’s much more to this crisis.