The recent revelations about foreclosure processing -- that some banks may be repossessing the homes of families improperly -- has rightly outraged the American people. The notion that many of the very same institutions that helped cause this housing crisis may well be making it worse is not only frustrating -- it's shameful.
No one should lose their home as a result of a bank mistake. No one. That is why the Obama Administration has a comprehensive review of the situation underway and will respond with the full force of the law where problems are found. The Financial Fraud Enforcement Task Force that President Obama established last November has made this issue priority number one. Bringing together more than 20 federal agencies, 94 US Attorney's Offices and dozens of state and local partners to form the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud, the Task Force is examining this issue and the Attorney General has said publicly that if it finds any wrongdoing the members of the task force will take the appropriate action. The Federal Housing Administration and Federal Housing Finance Agency have launched reviews to make sure servicers are in full compliance with the law. The Office of the Comptroller of the Currency has directed seven of the nation's largest servicers to review their foreclosure processes, fix the processing problems and determine whether there is specific harm that has been caused in individual cases.
The message all these institutions are sending is the same: banks must follow the law -- and those that haven't should immediately fix what is wrong. Given the problems that have already been found and admitted to by some servicers, the Obama Administration fully supports the voluntary moratoria that are already in place and others should they be deemed necessary. Some have suggested, however, that all foreclosures in every state, under every servicer, should be stopped. But a national, blanket moratorium on all foreclosure sales would do far more harm than good -- hurting homeowners and home-buyers alike at a time when foreclosed homes make up 25 percent of home sales.
For instance, in Cleveland, where there are over 18,000 vacant homes, lives Millie Davis who recently earned her Master's Degree in Urban Planning from Cleveland State University and just bought her first home - one that had fallen into foreclosure and sat abandoned for years. Had a blanket moratorium been in place, that sale would have fallen through -- not only deferring her dream of homeownership but leaving neighbors on the block to stand by and watch as their property values continue to plummet.Right now, families who have watched their home values decline over the last few years want nothing more than homebuyers like Millie to buy the vacant homes in their neighborhoods. These homeowners are at risk, too - and the best hope they have is for the "Foreclosed" signs in front of the vacant, abandoned properties on their block to come down, so that the value of their homes can start rising again.
And we've seen this happen in communities like Huber Heights, Ohio -- a suburb outside of Dayton -- where some blocks saw home values plummet by 30 percent due to neighboring homes going into foreclosure. It was only when those foreclosed homes started to sell again that home prices in that neighborhood began to stabilize -- and even increase in some instances.
Another unintended consequence of a blanket moratorium on foreclosure sales, even where problems haven't yet been found, is that it could cause servicers to take their eyes off the ball when it comes to helping at-risk homeowners stay in their homes well before their problems reach the crisis of a foreclosure. By the time the home gets to foreclosure, it's often too late to help families stay in their homes -- they may be too far behind or in some cases, they've already left the home. Banks need to provide more help, more people, more resources to those families facing a crisis long before they ever get to a foreclosure -- so more families can keep their homes. And where foreclosure is not avoidable, having been processed legally and appropriately, banks should help families transition to sustainable housing situations with dignity.
We've seen real progress in the housing market. Foreclosure starts are down by 30 percent from a year ago. In the last 18 months, 3.3 million families have received restructured mortgages with more affordable monthly payments, which is more than twice as many foreclosures that have been completed during that time. With vacant and abandoned homes more than three times as destructive to the values of neighboring homes as occupied homes that are just beginning the foreclosure process, a blanket moratorium would only slow down that progress. President Obama has said that we can't stop every foreclosure -- and he's right. But the more quickly we provide help to families -- whether it's to stay in their homes, to ensure they can buy new homes, or to help them to transition to affordable rental housing -- the sooner our neighborhoods will stabilize -- and the sooner our economy will recover.
A task force formed almost a year ago is still investigating the problem.
Three additional agencies are investigating the problem.
All of these investigative bodies will, independently, have the power to do something to lenders when they finally get around to it..
The Secretary seems to think 3.3 million homes have received loan modifications despite all the evidence to the contrary in today's HuffPost.
The bottom line is that nothing is being done concurrently by many agencies using flawed information.
And you wonder why the average voter does not trust government?
And one of these days, would you mind addressing the 30,000 people who, in desperation, showed up in Chicago to apply for affordable RENTALS? Or are homebuyers the only ones you'll be catering/feeding a line to until 2012?
Whatever seats Dems keep in the House/Senate in Nov are on borrowed time. If this utter disregard for prosecuting the guilty continues, I'll not life a finger for Dems in 2012. This administration has emboldened theft, right down to our elections, and there's no need asking for our help to offset the Citizens United million$/billion$ in 2012 if you continue to feed us garbage, instead of prosecuting ANY guilt party for ANY crime they've committed.
Before you call me a whiny lefty, the words "imperialism" and "destroy capitalism" haven't been in my demands in a long time, and I'm phonebanking at least 100s voters yet again, so watch it!
Americans might be encouraged to do more if they thought there was a reason why they should. At this point most Americans have lost faith in the government, politicians, the bankers and Wall Street. The supreme Court is obviously corrupted to its core, corporations are not our friends and the good jobs are being farmed out overseas.
Recovery is a bad joke and the Republicans continue to threaten social security, unemployment and everything else this nation once stood for. I will be surprised if this nation is not involved in a all out internal war within two years.
Help Families by returning justice to the land, and decency to government.
"Foreclosed homes make up 25% of home sales." (Donovan) What is unsaid is who is buying those homes, and he knows that it is not primarily the Millie Davis', but the same old speculators who gambled with other's money in the first place. Banks, Insurance Companies, and Medical Industry not the only ones "smart" enough to play these games? And it doesn't take a Harvard Degree.
Of the vacant homes across the country, the majority are not the ones that have "set abandoned for years", but those from which people have been driven because of poor-judgment, bad-advice and worse. SUCH are the causes of Davis' "neighbors on the block standing by and watching as their property values plummet," NOT a shortage of Short Sales.
"Unintended Consequences" of fraud at closure, plus more fraud at fore-closure, to be cured by more fraud and more foreclosures?? Survival at another's expense? This IS "Survival of the Fittest", and at the core of the Capitalist Mxim, "for me to win, someone has to lose" (Kudlow/CNBC)
Credit default options rewards those banks who have people stop paying their loans.
The rewards can be greater than if they allowed the loans to be adjusted in a manner
that would allow proper repayment. Plus, since the issuers of the CDOs do not get
the house (its just a side bet, one that can be placed multiple times), the banks get
a second bite from the apple by profiting from the house being sold later on.
This is pure Evil.
wouldn't you call that evil too?
I guess I don't get your point.
If the banks lay out the money up front for home loans, and then they don't get paid back, aren't they out of the original money they put up?
what am I missing?
A mortgage loan is not a "purchase" by the home"buyer".
It is a payment-for-protection, as in old Chicago Daze.
"If you promise to pay me $2500 per month, I promise not to kick down your door and throw you out into the street. And frankly, I don't want your damned-house. I know what a piece-of-garbage it really is, and how hard it will be to get more money out of it. But since I knew when I took my commission at your loan closing, that you could never meet the fine print, I sold off your obligations to some other suckers, and now will take a second commission on the sale of the inventory to other players like me."
Gee, it is a great game. It is called WHO REALLY OWNS THIS HOUSE? Tune-in?
Also, Sec. Donovan please Stop Carrying Water for the Banksters. It's kind of Embarrassing.
Change? that's old hat.
*
How about - "No one should be allowed to stay in a home they can't afford or pay for... No one"?
I'd support both stances....but not just one. I am a renter - responsible so far :), but if the govt wants to use tax payer $ to pay people's mortgages, I'd like the keys to my free house too... just sayin.
This is very similar to the BP disaster. Initially, Obama took BP's word for it that they can manage the spill, but as it became clear that BP cannot stop the flow of Oil anytime soon Obama tried to act betrayed and denounced BP. This in turn put BP in defensive posture, which diminished any desire to work with the administration, and affected states got to cut their own deals with BP.
The problem of foreclosures is dragging down the economy and it is not going away. Urging calm and providing analysis by the administration is not the solution. Soon or later this will be out of the administration’s hand when states will be forcing the banks to deal with this problem in courts. This will virtually ensures the laws of unintended consequences to create a bigger mess than we now have.