A Speedy Solution to the Foreclosure Crisis

A Speedy Solution to the Foreclosure Crisis

A speedy solution to the foreclosure crisis following the disclosures about foreclosure documentation fraud is imperative for all concerned the house owners, the mortgage industry and the government at the federal and state levels; it is best for the economy.

Talks are on between the banks and the attorneys general for the setting up of a fund the first of its kind in the history of the industry. The aim is to pay compensation to those house owners who can prove that they have been wrongly foreclosed upon.

The attorneys general of all the states have teamed up to investigation the foreclosure issue. They have been tackling the banks one by one but the terms are broadly similar. The officials of the state have focused on Bank of America, JPMorgan Chase and Wells Fargo. The expectation is that any agreement with them will be a blue print for agreement with others.

The fund matter is being looked upon by each side separately. The most contentious point is abut how much should be the contribution of each, the time period and who would take the decision about which of the house owners should be compensated.

Another bone of contention is if the banks will bring down the principal for underwater borrowers. The industry had successfully fought against the bringing of legislation what would have empowered bankruptcy judges to reduce the principal of some loans.

Although the banks have admitted faults in their foreclosure processing the big banks are now arguing that they have not made any mistake in repossessing the properties of defaulting borrowers. But the courts are continuing to grapple with the problem of the forged or slipshod paperwork. Did it amount to fraud and hence should these cases be dismissed?

Recently Senator Christopher Dodd (Democrat/Connecticut) at Senate Banking Committee hearing pulled up the banks. He said, "Many in the industry were too quick to call these problems technical' and to insist that nobody is losing a home to foreclosure without cause".

He gave a call to all those involved to work in unison and "finally put an end to the housing crisis". Dodd added that the servicing sector of the mortgage industry has broken apart and is not capable of dealing with the current mayhem.

Democrat Senator Jon Tester said that he was very concerned about the wide impact of the current problem and what effect it would have on the financial and housing sectors. He felt that the mega servicers had been too casual about the risks that they courted with their careless operations.

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