The problem is, no one wants to point out the folks who are the real culprits: the idiot borrowers who agreed to 2,3,4,500 thousand dollar mortgages they knew they would not or could not pay back.
A mortgage closing takes and hour and you have to sign about 100 documents — all of which say the same thing: make the damned payments.
Why we want to let these folks off the hook is beyond me. Especially Freepers who want to let them off the hook.....
I think the banker and borrowers both should go to jail for fraud. Remember, after the banker consumated the deal, he sold the note to investors, pension funds, etc, etc as AAA rated products. Worst they claimed to physically own the note and title to the property. All written on a prospectus and signed off by the CEO of the bank. Guess what? According to SEC that is fraud. Bankers and borrowers need to face a judge and jury. It is starting to happen. Banks and borrowers are going to end up like tobacco companies, a decade of lawsuits. Atleast the cigarette companies were selling a legal product with known side effects. Bankers were selling fraud.
That wasn't the banks money they were lending out, by way of the Federal insurance, that was your and my money they gave out. The bankers had a fiscal responsibility that they failed to uphold, and they should be held to account.
“Why we want to let these folks off the hook is beyond me. Especially Freepers who want to let them off the hook.....”
There’s a fair amount of blame to go around, but I don’t put stupid consumers at the top of the list.
At the top of my list are the people who put together derivatives, and credit default swaps. The people who sold “toxic assets” knowing they weren’t worth spit, but doing all they could to get them off their own books. When the bubble burst a lot of pension funds, mutual funds, and 401k’s took a big loss.
Next are the mortgage bankers. I know, I know, caveat emptor, right? Well, back in the day, the bankers would make sure you could pay. They had formulas for your debt load and the mortgage payment, and if you didn’t meet the standards, no loan. In fact, the consumer could rely on banker’s approval as a measure of their ability to pay. Predatory banking was a new twist. Taking advantage of ill informed people may be legal, but it’s far from ethical. And it’s bad business. It establishes the bankers as adversaries, not allies.
Finally, at the bottom, I put stupid consumers. Yes, it’s the consumer’s responsibility to be as informed as possible. But trust me, in those closing sessions, the papers come fast and furious, and the summary by the banker is trivialized to the point of being useless. So, the consumer needs to either be experienced, or take a full day to read all that’s shoved their way, or have a lawyer at closing. I don’t give the consumer a pass, but I can understand how a first time buyer can get snookered. There are also those who speculated, bought more than they could afford, knowingly. Those people are just as bad as predatory lenders.
Just my 2 cents, since this is the place to spend it.
Yeah, da heck with holding the banks responsible for their shady business practices, or letting them face the risk they accepted. Not to mention ignoring the laws they broke.
The issue is not the forclosure, even with the document fraud.
The issue is the questionable ability of the mortgage holder to convey clear title to the new owners without the proper paperwork (which they cannot produce) because of MERS.
Can of worms and it is already opened. What a mess. Will take years to solve and there is no universal quick fix. Only case by case solution.
Sure they are a factor (maybe 10%) but the biggest mess was created on Wall Street and by thieving Banksters who bundled these mortgages into securities to be sold and traded and to be bet against and to take out credit default swaps on
Look up Magnetar and articles by Gretchen Morgenson of the NYTimes
You need to follow the money and the billions made off this mess was made by Banksters/Wall Street/hedge funds
Barney Frank and Chris Dodd are to blame but they did not make millions off it
Senile Ayn Rand style hippie Alan Greenspan is to blame with his easy money policies that fueled insane lending ...but he did not make millions off it
House flippers ....bush league scammers compared to the Banksters
Angelo Mozillo and Countrywide ...made vast millions off the scam
So someone makes a bad financial move and fails to honor a civil contract is the same as a financial institution failing to do their do diligence and keep their paperwork straight and because of that they are forced to commit multiple felonies and Fraud on the Court in an effort to cover up their ineptitude in make, processing and documenting these loans loans that they made with other peoples money which they resold multiple times, while making a fortune in servicing fees and then getting most of the money back from the government insurance?
That’s like giving life to the corner three card monte dealer while handing out slaps on the wrist to the likes of Bernie Madoff, OH wait that’s pretty much what we do look at Countrywide for a good example!
What do you thing should be done to the growing numbers of these same financial institutions that are walking away/defualting on millions of Commericial real estate?
What I think it's really all about is this:
Back when I was a kid, and even when I bought my first house in the '80s, making a mortgage was all about the borrower. Did the borrower have the income and sound financial history to make the loan a good investment for the bank?
Sometime about 10-12 years ago, the mortgage became less and less about the borrower and more about the house. The rise in the value of the collateral (after all, "Housing Always Goes Up") would ensure the viability of the loan regardless of borrower conduct.
This went hand in hand with the change in the mortgage industry's business model. Where mortgage companies historically relied upon the income streams from held mortgages, by the early 2000's this had largely been replaced by one-time origination and processing fees, which were followed immediately by flogging the note off to some successor purchaser.
One did not have to be a financial genius to see this was the road to disaster. I sold my house in 2006 for $450,000, you could probably buy it for half that amount today. And believe me, I'm no genius. I'm just smart enough not to drink the asset bubble Kool-Aid.
And yes, the CRA and its Democrat backers had something to do with this. But not all of it by a long shot. The willful blindness of the early 2000's was one hundred percent bipartisan.