Robert Stein 1924-2014

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Sunday, June 05, 2011

Bitter Laugh: Homeowners Foreclose Bank

From the gloom of news, a man-bites-dog story brings comic relief to a national tragedy.

In Florida, a couple wrongfully targeted by Bank of America proves in court they have no mortgage, is awarded legal fees and eventually allowed to foreclose the branch when the bank fails to pay. Sheriff's deputies, movers and the couple’s attorney go there with permission to remove desks, computers, copiers, filing cabinets and cash in the teller's drawers before the bank finally antes up what it owes.

Nationwide, however, homeowners are suffering as an Obama program started two years ago to modify mortgages for three to four million families reports that it has helped only 670,000 so far. The Treasury Department with $46 billion to spend on keeping homeowners in their houses so far has spent only about $1.85 billion.

A former Federal Reserve economist estimates as many as a million homeowners were foreclosed as a result of insufficient help for the unemployed. “The money was there and they didn’t spend it,” says a critic.

Administration officials defend themselves by pointing out that their programs are voluntary, limiting how hard they can push mortgage providers and investors, who often profit more from foreclosures than extending aid.

So, as millions keep suffering from a continuing housing crisis, there is fodder for both sides of ideological argument, the Republicans sure that government can’t solve problems of free markets, the Democrats certain that legislative solutions have been made toothless by GOP restrictions on what they can do.

There may be merits in both arguments, but meanwhile Americans are still losing their homes at an alarming rate, except for the Florida couple who gained temporary possession of a bank branch.


Anonymous said...

A small gesture, but somewhat hopeful. What about all these banks who keep getting paid every month on underwater mortgages? There are millions of homeowners paying for properties which are worth less than 1/2 what their mortgages are for. The banks keep these on the books as current, therby showing inflated property values which are no longer relevent. The consumer ends up subsidizing the banks for inflated loans on deflating properties. What if we all just stopped paying on these just plain bad deals? They'd surely flip out then, wouldn't they?

Joe Lavery said...


Joe Lavery said...