Thursday, October 21, 2010

Some Federal Intervention...Finally


It was announced on the radio recently that several creditors, in addition to Bank of America, are being investigated by federal agencies including the FBI for incorrect paperwork regarding many thousands of bank owned properties.  The lenders, upon realizing the predicament they had gotten themselves into, apparently rushed through the foreclosure process and illegally kicked people out of their homes, and took possession of these properties.

It's unjustifiable how these lenders have acted from the beginning in their business of lending; a business they were supposed to be trusted experts in.  Instead, people were encouraged to take problematic loans, destined to reset to ridiculous rates, and which were sliced and diced into securities.  Most of the original mortgages can't even be tracked down.

And, by the way, I have wondered to myself over and over, who in the world are these private investors who understood credit default swaps way back in 2003?  They sure were ahead of the game and made a LOT of money at an inverse relationship to everyone else's fate.  It smacks of Wall Street's Viaticals, or "Death Bonds."  Meanwhile, all of the mortgage back security investors, which included pensions, 401K's, whole cities and even countries such as Norway, totally lost out along with all of the home-owners.

I'm not someone who likes a lot of government in our business twenty-four seven, but clearly, the lenders are institutions which should have been better monitored and regulated since they consistently showed a very strong tendency for misbehavior from money-making at any cost.  It's really late in the game, but I guess the lenders have finally gotten the attention of the Feds, haven't they?