Bank Of America, GMAC Barrel Through Foreclosure-Gate Allegations
Despite significant evidence that the foreclosure process is severely corrupted, mortgage lenders Bank of America and GMAC have resumed foreclosure proceedings against more than 100,000 Americans.
Bank of America had halted all foreclosures earlier this month as lawsuits alleging fraud and malfeasance piled up.
"Foreclosure-Gate" gained traction when several state attorneys general, as well as U.S. Attorney General Eric Holder, announced they would look closely at thousands of foreclosures that may be relying on faulty paperwork.
Ohio Attorney General Richard Cordray said at the time: “You’re going to see a tremendous amount of activity with all the AGs in the U.S. We have a high degree of skepticism that the corners that were cut are truly legal.”
Consumer advocate Ralph Nader and others have argued that during the past 20 years, a rampant proliferation of mortgage-backed securities has allowed banks and other lenders to sell mortgages down a long chain of ownership. In the process, documentation has often been lost, improperly modified, or never created in the first place.
The task of actually checking all of these back records and correcting them is sisyphean, which is probably why BOA and GMAC have decided to resume foreclosing houses without fixing the mess.
After all, the U.S. economy is in a decidedly precarious position. So, the big financial players have decided to return again to their usual strategy: Just Keep Going.
The White House, which opposed BOA's decision to stop foreclosures in the first place, has vowed to "remain committed to holding accountable any bank that has violated the law."
But it's clear that many players, including some of the attorneys general, have changed their tune about holding mortgage lenders accountable.
Texas Attorney General Greg Abbott, for example, told CNBC that "we have to deal with appropriate title to these homes." But, when it comes to correcting hundreds of thousands of accounting errors, he said: "there's no reason why all these financiers can't get that accomplished by the end of October."
As unlikely as that is, the threat that a full-blown foreclosure crisis would wreck the economy all over again has tempered some of the debate. And made it more likely that those companies who can get away with it will ignore the problems, settle some of the lawsuits, and keep doing business.
Which is, of course, is how we got here in the first place.
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