Tag: Mortgage Crisis

WASHINGTON-- One year after the Obama administration launched its $75 billion anti-foreclosure program, the housing market remains volatile, loan modifications have been scant, foreclosures are still sky-high — and more and more lawmakers are wondering why the White House hasn’t been more aggressive in tackling the crisis.

Memphis city officials have filed a lawsuit charging mortgage-loan giant Wells Fargo with discrimination. The New York Times reports: The lawsuit, filed in federal court...

As bank-owned foreclosed properties pile up across the country, from abandoned houses in hard-hit neighborhoods to empty big box retail stores in failed strip malls, the battle to hold someone responsible for the brick-and-mortar mess left behind by the mortgage crisis continues to heat up.

Not long after foreclosures started to take off in 2007 and the mortgage market’s collapse began to cripple the economy, one lesson seemed obvious: The predatory lending practices that led to the crisis had to be reined in. But despite massive government bailouts of banks and lenders due to losses from toxic mortgages, that reform still hasn’t happened.

The Columbia Journalism Review posted "The List" this week, a catalog of 727 stories published in the top business press outlets during the run-up to the financial crisis. "Power Problem," an analysis of The List by CJR Editor Dean Starkman, is due to post next week. In compiling The List, the CJR staff looked to determine if in fact business writers had provided adequate warning to the public before the bad-loan business toppled global finance. They searched stories from 2000 to 2007. The answer: Sorry, no. The top business writers in the country failed to adequately survey the field and see the looming disaster.

As the Obama administration launches a new bank rescue plan and prepares to overhaul the financial regulatory system, lawmakers will look closely at the lending practices of major banks and mortgage firms. But some think they also should probe the government-chartered Federal Home Loan Banks, which served as lenders of last resort as the credit crunch intensified — propping up the very banks that made the kind of risky mortgages that led to the housing crisis in the first place.

Congressional Democrats hoping to use the economic stimulus package to force lenders to refinance troubled mortgages have met an unlikely opponent: President Barack Obama. Many Democrats, including Obama, have long-supported the strategy of empowering bankruptcy judges to alter the terms of primary mortgages to prevent foreclosures. But White House officials have said they don’t want the bankruptcy provision in the stimulus bill for fear of alienating Republicans, most of whom oppose the change.

When the government announced in November that it would use mortgage giants Fannie Mae and Freddie Mac to streamline loan modifications for possibly hundreds of thousands of borrowers, officials billed the idea as a fast-track program to fight foreclosures. What no one mentioned is that homeowners would have to sign away their rights to sue, if they wanted to get those loans modified.

The Great Depression permanently changed the government's role in the U.S economy, and it appears increasingly plausible that the current recession will have an equally lasting policy legacy. The bailouts orchestrated by the Bush administration have been an absolute mess, but they present an opportunity to create new consumer protection-oriented economic programs the likes of which we haven't seen since the days of Franklin Delano Roosevelt.

Some Cleveland, Ohio neighborhoods have a message for banks that abandon their foreclosed houses or unload them at fire sale prices to speculators: Stop dumping your trash on us.