The answer to the foreclosure crisis in the USA was evident at the beginning of the foreclosure crisis. The problem is simple - the United States Congress. The reason: there are no Federal Consumer Banking Regulations that protect a mortgage borrower with a loan form a federally chartered savings bank. The source of this information is the Office of Thrift Supervision (the federal supervisor in the USA of federally chartered savings banks.) (Note that the Office of the Controller of Currency supervises National Banks.) Federal Banking Regulations basically protect banks from those who commit crimes against banks. There are NO federal consumer banking regulations that protect a mortgage loan borrower from their federally chartered savings bank – even if that bank is unethical and commits acts that violate the standards of acceptable national banking standards, harming the mortgage loan borrower. Accordingly, Federally Chartered Savings Banks operate with impunity.
Congress - your elected representatives - have not enacted any federal banking consumer legislation to protect the mortgage borrower from a federally chartered savings bank because the wealthy and powerful banks will not permit this. An example to prove this statement is when Congress backed away from giving power to US Bankruptcy Judges to amend a bankruptcy petitioner’s mortgage loan. Another example is the current Congressional rhetoric to help protect lenders, home builders and Wall Street (hedge funds) with financial aid but not the mortgage loan borrower. A last example is when Congress in 2005 helped protect banks by making it almost impossible for an individual to discharge their credit card balances in bankruptcy. This last example heralds the next crisis - called the “credit crunch”. The proof of what I say is in the answer to the question: how many federal mortgage loan borrowers in the USA have been able to fight their foreclosure either in the courts or through petitioning the federal government and have won or stayed their foreclosure? Unable to financially continue a counterclaim lawsuit combined with the bank’s legal threat of a frivolous lawsuit against me for fighting my foreclosure, reluctantly, I gave up. The federal mortgage lending system is designed so that the mortgage borrower has no protection and his or her voice is silenced.
Alan Greenspan in his book “The Age of Turbulence” on page 114, describes the Savings and Loan crisis in the 1980s ”. I believe we have a repeat of the 1980s, only worse. Our elected officials have done absolutely nothing to legislate and regulate the savings banks since the last crisis and were so surprised when this crisis started in early 2000. Is this arrogance or ignorance? Mortgage borrowers don’t need a tax bailout, they need a level and fair playing field.
The solution to the Foreclosure Crisis is to elect representatives to the Congress of the United States that represent the people that elected them, and not themselves, They need to pass legislation to protect federal mortgage loan borrowers from the wealthy and powerful banks who violate sound banking practices. Congressman Barney Frank and Senator Christopher Dodd who each chair committees in the House and Senate have not enacted legislation to protect those among us that can not afford the thousands and thousands of dollars needed to hire attorneys to hold our hand at the foreclosure auction as we watch our houses sold for pennies on the dollar. Both of these committees have certainly tried to protect the lenders, the real estate & builders, but not one hint of giving the borrower under the threat or in actual foreclosure any legal avenue to fight this Federally Chartered Savings Bank.
The core problem is not the variable rate mortgages or sub prime loans: it is the lack of regulation and oversight of ALL mortgage loan lenders and the lack of protection for ALL mortgage loan borrowers.
If this crisis was the Titanic, then our elected officials would be in the life boats waving goodbye the women and children still aboard the sinking ship USS Foreclosure.
Michael LittleBig ,Rocky River Ohio