The Top Twelve Reasons Why You Should Hate the Mortgage Settlement
As we’ve said before, this settlement is yet another raw demonstration of who wields power in America, and it isn’t you and me. It’s bad enough to see these negotiations come to their predictable, sorry outcome. It adds insult to injury to see some try to depict it as a win for long suffering, still abused homeowners.
There’s almost nothing here for the homeowners on a per-person basis. There is a whole lot more in it for the banks, not least the cutting off of serious lawsuits about what appears to be long-established patterns of fraudulent behavior by the banks and/or their agents.
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Those who are in a position to address the mortgage crisis won’t, because it all reflects back on policies that they put into place. Simply: They don’t want it all laid out on the table, bare. Not in an election year, especially.
But another problem is that it is a complicated scheme AND one that is so blatantly in disregard of both law and common sense that State judges (the ones generally at the heart of dealing with it) either don’t understand it, or think that lawyers for homeowners are trying to pull a fast one on them when they explain what happened. There is neither the time, nor (in most cases) the brain power in the Court system to deal with this.
Plus, most judges feel, and I don’t know that they are wrong, that money was lent, so the homeowner is responsible.
The nature of what happened is so mindblowing that I think it just works against people’s common sense to accept that what happened, happened.
And as a practical matter, the legally correct outcome of most foreclosure cases would be “creditor cannot prove the debtor’s liability to it.” And the debtor homeowner would now have a debt-free home. While that may be the legally justified result, it would just rub everyone the wrong way and clearly not be correct in any other sense. How would we all feel if sub-prime and other borrowers suddenly started winning free houses just because their lenders starting fudging paperwork illegally?
(recognizing as well that some foreclosure actions have been alleged to be against homeowners who actually had no mortgage at all, or one significantly different that as alleged in Court by a supposed creditor.)
Isn’t this similar to anybody losing any other note or contract? Or falsifying billing? Or never properly filing a will?
It seems there’s a double standard. Poor folks don’t “deserve” those homes. Institutional investors somehow “deserve” theirs. (The settlement largely benefits “principal modifications … largely from mortgages owned by investors.”)
As I’ve said many times before, if I’m going to be taxed to give a windfall to someone, as between the people who got in over their heads even for the wrong reasons and the banks who took advantage of them, I’d rather subsidize my neighbors.
I agree that a free house is the legally correct answer. The problem with it is that the fraud is sooo widespread that it WILL have ramifications that go way beyond “banks getting what they deserved” or whatever. You cannot simply wipe out the mortgage debt of half of America. Aside from shooting the economy while it’s down, you will create a class difference (and accompanying animosity) between the free-house people, and everyone who DIDN’T get a free house (many of whom will still be paying a mortgage they can barely afford).
There is NOT a simple solution to all this and what may be the correct outcome of Smith v. Lender, is most definitely NOT the correct outcome of every-mortgage-holder v. every-lender, w/ the mandatory joinder of everyone.
(and do you really want ANY politician, in an election year, deciding the criteria as to who gets a free house – what criteria applies? You don’t think THAT will lead to corruption on a scale unimagined previously?)
This is IMHO the wrong way to put the question. We already have politicians deciding that the banking sector gets an almost free pass. The choice isn’t whether politicians will give out freebies. It is only who gets them. Since I will be paying for them, my personal vote is I’d rather pay for my neighbors to get the windfall, even when some don’t deserve them, then to see them go into Wall Street bonuses.
Will I feel a bit the sap since I won’t see the benefits in either case? Most likely. But that feels like it’s a done deal, a sunk cost: it’s going to happen. The question is only who gets it and I think the bankers as a class are more to blame then the mortgagers as a class even though there is clearly a subset of the mortgagers who are very much to blame too.