Who’s to blame? The foreclosure crisis has plenty of culpability to go around: Commercial Bankers. Wall Street Bankers. Mortgage Brokers. Courts. Judges. The Federal Government. Home Buyers. With all the finger pointing going on, one thing is absolutely clear—if anyone is facing a foreclosure, they need a lawyer. Or be prepared to just walk away.
From America dream to nightmare scene
Nightmare scenarios are affecting every strata of America’s financial and social life. Stories abound of people calling their banks to learn that it no longer holds their mortgage and can’t, or won’t, tell them who does.
Retired judges in Florida have been called back to the bench to help clear out the foreclosure backlogs and have set up what defending lawyers call “rocket dockets.” These courts have become rubber stampers for banks that often don’t have the proper documentation to mount foreclosures.
So called “robo-signers” seem to have been employed on both ends of the mortgage process. They signed thousands of documents they had not read to push through loans, and signed thousands of documents they had not read to push through foreclosures.
Some banks have advised home buyers that they can only do a refinance if the buyer is in default and instructed them to skip a few payments. Because of the missing payments, the bank then began foreclosure proceedings.
Vacant houses are turning some neighborhoods into slums. And the list goes on.
Always the little guy
Most often the shame is put on the little guy, the home buyer. Out of ignorance or stupidity, many home buyers did try for the dream of having a house and perhaps got in deeper than they could realistically handle. How did those loans get approved in the first place? Wall Street bankers invented a way to bundle mortgages into investment products for wealthy individuals or institutional investors. They sold these so-called securities at a hefty fee.
They were abetted by investor rating companies who stamped these securities as AAA, or very safe risks. Wall Street bankers wanted more of these products to sell and pressured the mortgage brokers and the commercial banks for more mortgage properties. Hefty fees started to flow and, as a result, borrowers weren’t really told what they were getting into; or loan officers looked the other way when incomes or employment bona fides were fudged. Many home buyers were shocked when their adjustable rate mortgages suddenly almost doubled (or worse) their monthly housing outlay.
House appraisers overvalued properties, sometimes in cahoots with financiers, sometimes just responding to the the real estate boom. Higher mortgages and the resulting higher fees certainly played a role. When a buyer tried to sell, often to escape foreclosure, they found out that they owed more than they could get from a sale.
Feds looked the other way
The federal government looked the other way, too. It gave tacit approval to these shenanigans by pointing out all the citizens who were now experiencing the American dream of home ownership. Thousands of these loans should have never been approved. When defaults started to skyrocket due to unemployment or other recession-related maladies; it became time to pay the piper and everything started to collapse.
The banks and brokers never had the wherewithal to properly handle the initial paperwork of so many new loans, and they certainly didn’t have the infrastructure to deal with the volume of foreclosures. Paperwork has been lost, or never existed, and the trail of the real mortgage holders has been hard to follow as these mortgage securities were sold over and over. One attorney in Florida said that maybe ten percent of the foreclosure documentation she had seen was completely free of fraud.
Immigrants vulnerable
Many folks were actually pressured into assuming loans that they didn’t really understand, and sometimes didn’t even want; brokers and banks were so anxious to reap the untoward fees. Of course, an immigrant who did not understand the US real estate market would be a prime target for aggressive lending practices. Some were talked into taking a loan as an act of patriotism for their new homeland, as proof that they were good citizens. This sad situation was exacerbated by language difficulties.
Slopping the hogs
Bankers, brokers, and so many others lined up at this trough of mortgage and securities fees and made a slop of the whole housing industry. When the pigs saw their mortgage securities starting to fail, threatening the whole US economic structure, they once again trotted over to the trough and the government started to slop the hogs again, only this time with tons of cash bailouts courtesy of the tax payers. A real shame is that banking executive officer salaries and perquisites remained the same or even increased.
Sure, a lot of home buyers are to blame for a degree of the mess and should have their houses foreclosed. But the sloppiness—especially with approvals—that accompanied the greed of the mortgage brokers and bankers has to be paid for as well. If this means that some home buyers will walk away from court with free houses because of this greedy sloppiness, so be it. Consider it a fine for extreme avarice. Years will pass before the shame and blame of this whole debacle is totally played out.
* * *
Lazaro Law Group, Professional Corporation represents immigrants all over the United States and the US Embassy in Manila. The firm’s offices are located in San Francisco, Fremont/Newark/Union City, and Sacramento, California. Attorney Johnson Lazaro can be reached at (415) 800-5775 or toll free at (855) 4-LAZARO. His email is This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
* * *
This article should not be taken as legal advice for any individual case or situation. The information is intended to be general and should not be relied upon for any specific situation. This is not meant to create a lawyer-client relationship.
| < Prev | Next > |
|---|
