Wednesday, January 09, 2013
Criticism of $8.5 bil mortgage abuse settlement
The lead editorial in today's New York Times criticizes federal regulators for the "flawed" settlement reached with ten major banks for alleged abuses in the mortgage industry. The settlement, which totals $8.5 billion, will provide $3.3 billion in cash payments to those who have already lost their homes and $5.2 billion for modifications to loans that are currently underwater. While that seems like an enormous amount of money, it is dwarfed by the number of homeowners who either have or had bad mortgages. I agree with the sentiment expressed in the editorial that the efforts by the Feds to punish abusive practices and provide real assistance to those with distressed mortgages has not only been ineffective, but consistently ineffective for going on five years now. There's a certain "going thru the motions" quality to the actions of both regulators and lenders, as if they're waiting for us to all grow tired of waiting and forget what happened. I do think the window for effective action to remedy and punish past abuses is nearly closed, but that doesn't mean we should forget what happened and implementing effective rules that diminish the chances of it happening again.
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2 comments:
It's cold comfort to those who lost everything to the rapacious actions of these banks, but even a day late, and eve a dollar short, the institutional memory of the penalty will deliver some positive impact in the future.
A separate question: I have not been able to confirm from the information I have available on the judgment, and I am not optimistic, but what standing would someone have if they were forced into bankruptcy before the foreclosure was executed? Would you know?
I can only guess about the consequences of a pre-settlement bankruptcy and that would be that individuals would have to petition the respective bankruptcy courts to reopen their cases but as I said, that's just a guess.
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