White House Punts On Foreclosures
Some might find solace in Press Secretary Robert Gibbs' recent remarks about foreclosuregate--I don't. Here's what he said:
As institutions are determining their next steps in addressing these [foreclosure] issues, we remain committed to holding accountable any bank that has violated the law. In addition to strongly supporting the investigation by the state attorneys general, the administration's Federal Housing Administration and Financial Fraud Enforcement Task Force have undertaken their own regulatory and enforcement investigation into the foreclosure process.Once the states were on the case, federal regulators had to "investigate," but every official public comment about foreclosuregate has attempted to downplay the whole mess. As a reminder, here's where we stand:
- Most major mortgage servicers have initiated a self-imposed moratorium on foreclosures
- All servicers, except BofA, have limited the moratorium to the 23 non-judicial states
- 50 AGs have formed the Mortgage Foreclosure Multistate Group to investigate mortgage servicing processes
- Several states have called for, but not implemented, statewide moratoria, including AZ, CA, CT, OH, MA, MD and NV
- The White House and many other agencies, including HUD, have said they are against a national moratorium, but as Gibbs noted, some have launched investigations
- A smattering of class action lawsuits have been filed
- 2.5M foreclosures have occurred since 2005
- 3.1M foreclosures are in progress
- 3.4M seriously delinquent loans (defined as more than 60 days late) represent the next potential wave of foreclosures
Maybe you think, well who cares about the buyers of those toxic assets? Since some of the biggest purchasers of the mortgage bundles were pension and mutual funds, if they have recourse to put back the nasty stuff to the orignators, maybe your retirement account could feel a positive boost. Got your attention now?
The Association of Mortgage Investors (AMI), which represents the interests of investors like those big funds, has called for an expanded investigation of the foreclosure process. AMI notes "now that the messy business of mortgage servicing has been dragged out into the sunlight, we encourage regulators to expand the review to examine trailing liability from improper originations, warranty violations, and the securitization of defective mortgage loans, knowingly or otherwise."
OK, so we know why banks want to move beyond this mess and why investors are eager to put back the nasty stuff to the banks, but why is the White House punting on foreclosures?
In a weekend e-mail exchange with the Washington Post, Federal Housing Administration Commissioner David Stevens said "We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile housing market."
Did you get that? Even if there are ERRORS, it wouldn't be prudent to rock the boat.
With an election less than two weeks away, everyone in Washington is busy cashing in the big checks that banks have previously written. So thanks for the nice statement, Mr. Gibbs...how about some action?
Image by Flickr User Ed Yourdon, CC 2.0
