common refrain on this blog that gains more currency as frustration with the anemic economic recovery grows is that regulation of business is somehow to blame.
That might suit the right-wingers but it is a fallacy. And just as the big financial institutions were allowed to run amok by federal and state regulators during the go-go mortgage years, a brand new financial problem has arisen: phony foreclosures.
As banks loaned mortgage money like crazy during the last decade, they quickly securitized those loans, meaning they packaged them into parts and sold them off to new owners. Traditionally, if you buy a house, there is a deed of sale and trust or whatever in your local courthouse that states who holds the loan, for how much, and so on. If the house is sold or foreclosed upon, this tried and true system keeps track of ownership and the loaned money.
Well, not no more it don’t. Federal regulators and Congress are finding that many banks, especially the big mortgage enchilada, Bank of America, apparently sold off mortgages without bothering to take the time to record the sales properly.
They often used ill-trained and sometimes semi-literate robo-signers who would sign hundreds of foreclosure papers every day without even examining them.
So, you have banks foreclosing on the homes of people even though they don’t own the loan.
This is insane. But it has happened on such a large scale that it might dip us into another financial crisis.
The reason for this is simple: greed. Banks could give a damn about people or propriety. They made big bucks granting questionable loans. And they made even more bucks securitizing loans and selling them off without messing with the paperwork.
And where were the regulators? Who knows? Probably the same place when banks were greatly leveraging their lending to equity ratios and making loans to people without incomes.
But if you pay attention to the Republicans and some of the people who write for this blog, it’s not the banks’ fault, it’s the fault of “regulation” that is hampering our “free market” system.
Guess what? How can there be a “free market” when someone is seizing your property and selling it off because you haven’t paid a loan that really is no longer due to that person or bank? What’s to keep some free market maven, such as Jim Bacon or Groveton, from showing up at my front door and ordering me out so they can resell my house?
I don’t owe Jim Bacon or Groveton any money.
Peter Galuszka