Who Really Benefits From the Government's Mortgage Deal?
The government announced a mortgage "deal" that will end the lawsuits by states' attorneys general against banks.
The states sued the banks because it was shown that banks could not properly prove ownership of the mortgages they were foreclosing on. They couldn't show proper legal ownership of the mortgages because they couldn't produce a "clean" title to the mortgages.
The mortgages in question (millions of them) were used as collateral for Wall Street concocted products. These products bundled these mortgages. In effect, they sliced and diced the mortgages, bound them back together into packaged securities then sold the securities to their customers. In the process, the properly executed paperwork that shows the bank as lien holder against the property was somehow lost.
In 2010, many foreclosures were halted as people living in the foreclosed homes - assisted by sharp lawyers - demanded the bank that was foreclosing prove that they were the rightful creditor. They demanded the paperwork showing the bank was indeed the lien holder.
Attorneys general for the 50 states stepped in and sued the banks (actually five banks: Ally Financial, JP Morgan, Citi Group, Bank of America, and Wells Fargo) in the interest of "justice."
Now the government has stepped in to stop the attorneys general's lawsuits.
Has justice been served here? The state's attorneys general made a big deal about their interest in seeing that justice was served. I'd love to hear from them how that has happened.
One thing we do know is that some homeowners who face foreclosure will have the principal amounts of their mortgage reduced.
If these mortgages were sold legally and ethically, and the homeowners who agreed to take the mortgages did so with a full understanding of what they were doing, then why should the government decide to reduce their obligation? On what basis do they do this except to garner favor with certain people. Is that a legitimate exercise of government power - to garner favor with people?
On the other hand, if these mortgages were somehow sold in an unethical or even illegal manner by banks by their mortgage salesmen, perhaps a good argument can be made that the people victimized by such practices deserve relief. In that case, we should be seeing banks and bankers prosecuted for illegal or improper practices, shouldn't we? Are you seeing that happening? I'm not.
From what we've seen so fart, this looks like yet another government-bank-Wall Street collusion. Banks and their mortgage salesmen will keep the billions they made in fees selling these mortgages. Wall Street bankers and brokers will keep the billions they made selling those packaged securities to their customers. The government will curry favor with some homeowners whose mortgage principal is reduced - on what legal or ethical grounds, no one is saying.
The government claims that this is being done to bolster the falling housing market. That's not an ethical or legal justification. It's strictly an economic calculation. I doubt it will have that effect. It's just a way to justify their actions.
So how is justice being served here?
One thing we might conclude is that it will benefit some homeowners for no apparent reason except that the government decided it would.
Again, how is justice served here?
The states sued the banks because it was shown that banks could not properly prove ownership of the mortgages they were foreclosing on. They couldn't show proper legal ownership of the mortgages because they couldn't produce a "clean" title to the mortgages.
The mortgages in question (millions of them) were used as collateral for Wall Street concocted products. These products bundled these mortgages. In effect, they sliced and diced the mortgages, bound them back together into packaged securities then sold the securities to their customers. In the process, the properly executed paperwork that shows the bank as lien holder against the property was somehow lost.
In 2010, many foreclosures were halted as people living in the foreclosed homes - assisted by sharp lawyers - demanded the bank that was foreclosing prove that they were the rightful creditor. They demanded the paperwork showing the bank was indeed the lien holder.
Attorneys general for the 50 states stepped in and sued the banks (actually five banks: Ally Financial, JP Morgan, Citi Group, Bank of America, and Wells Fargo) in the interest of "justice."
Now the government has stepped in to stop the attorneys general's lawsuits.
Has justice been served here? The state's attorneys general made a big deal about their interest in seeing that justice was served. I'd love to hear from them how that has happened.
One thing we do know is that some homeowners who face foreclosure will have the principal amounts of their mortgage reduced.
If these mortgages were sold legally and ethically, and the homeowners who agreed to take the mortgages did so with a full understanding of what they were doing, then why should the government decide to reduce their obligation? On what basis do they do this except to garner favor with certain people. Is that a legitimate exercise of government power - to garner favor with people?
On the other hand, if these mortgages were somehow sold in an unethical or even illegal manner by banks by their mortgage salesmen, perhaps a good argument can be made that the people victimized by such practices deserve relief. In that case, we should be seeing banks and bankers prosecuted for illegal or improper practices, shouldn't we? Are you seeing that happening? I'm not.
From what we've seen so fart, this looks like yet another government-bank-Wall Street collusion. Banks and their mortgage salesmen will keep the billions they made in fees selling these mortgages. Wall Street bankers and brokers will keep the billions they made selling those packaged securities to their customers. The government will curry favor with some homeowners whose mortgage principal is reduced - on what legal or ethical grounds, no one is saying.
The government claims that this is being done to bolster the falling housing market. That's not an ethical or legal justification. It's strictly an economic calculation. I doubt it will have that effect. It's just a way to justify their actions.
So how is justice being served here?
One thing we might conclude is that it will benefit some homeowners for no apparent reason except that the government decided it would.
Again, how is justice served here?
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