Nov 8, 2010
In September, the banks tossed more than 102,000 families from their homes. Then, in early October, all the major banks hit the brakes. They announced that they needed time to clear up any “irregularities” in the legal documents. Many of the legal documents the banks used to foreclose on peoples’ homes were obvious fakes, even forgeries. And legal challenges to the foreclosures had uncovered huge amounts of fraud by the banks.
The Obama administration ran to the banks’ defense, rejecting calls for a national moratorium on foreclosures. The big banks – J.P. Morgan Chase, GMAC and Bank of America – quickly announced they were foreclosing again.
The same banks that made record profits out of the housing bubble – pushing ordinary people to take out mortgages with exploding interest rates and hidden fees – are now rushing to foreclose on those homes.
It’s no surprise. There are huge profits to be made on foreclosures.
Many of the mortgages the banks hold are insured by various federal agencies: FDIC, Fannie Mae, Freddie Mac, FHA and the VA. When the banks foreclose, the U.S. agencies pay off, and the banks make a huge profit.
The banks also profit on mortgages they don’t hold, even if there is no insurance and the mortgage holders take a loss. The banks own the companies that service the mortgages. And they collect big fees and commissions when a foreclosure goes through – right off the top.
In the 23 states where judicial review is necessary, the courts usually help the banks by expediting foreclosures. In Florida, for example, special “rocket dockets” were set up that review each foreclosure in a matter of seconds! In the other 27 states, the banks don’t even have to bother with the courts.
Facing more overt evidence of corruption in the process, Nancy Kaptor, a U.S. Congresswoman from Toledo, Ohio, an especially devastated area, told people to stay in their homes and not leave, even if they were being foreclosed on.
But the banks had an answer to that also. They hired “property preservation companies,” which come in and change the locks on homes that are in foreclosure, hound families with dozens of threatening calls a day, or break in when families are not home and ransack the place!
Already, the banks have foreclosed on more than three million homes, with another 11 million homeowners owing more on their mortgages than the house is worth. Given the average household size, that means more than 40 million have either lost their homes, or are in danger of doing so.
It is a national catastrophe!